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Market Recap
April 14, 2025
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All eyes on the bond market
The scale of the tariffs introduced by the administration shocked investors, sparking a roller coaster of a week for stock markets. Last week, U.S. stocks:
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Rallied on a rumor.
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Fell when the rumor was recognized as a rumor.
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Rose when President Trump paused reciprocal tariffs on most countries for 90-days.
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Fell as investors considered how the remaining baseline tariffs (10 percent on all countries, steel and aluminum tariffs, and 100%+ tariffs on China) might affect companies and economies.
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Rallied after the Federal Reserve assured investors it was prepared to step in, if needed.
“Economic angst enveloped every corner of Wall Street as U.S.-China trade tensions escalated, sparking a slide in stocks, the dollar and oil, with liquidations in U.S. assets pointing to disorder in the financial system,” reported Rita Nazareth, Isabelle Lee, Denitsa Tsekova, and Vildana Hajric of Bloomberg.”
Disorder in the financial system
Some of the disorder was found in the United States Treasury market where yields were moving higher when many expected them to move lower. Investors who are concerned about risk and sell stocks tend to seek financial shelter in investments that are perceived to be steady in a storm. For many years, United States Treasuries have been a “safe haven”.
So, last week, there was an expectation that, as investors sought shelter from the tariff storm, rising demand would push Treasury yields lower. That wasn’t the case. Investors sold U.S. Treasuries, pushing yields higher, reported Sydney Maki and Carter Johnson of Bloomberg.
“Billed as so rock-solid safe they’re risk-free, US Treasury bonds have long been the first port of call for investors during times of panic. They rallied during the global financial crisis, on 9/11 and even when America’s own credit rating was cut…But this time may be different. As President Donald Trump unleashes an all-out assault on global trade, their status as the world’s safe haven is increasingly coming into question…Yields, especially on longer-term debt, have surged in recent days while the dollar has plunged,” reported David Rovella of Bloomberg.
The Federal Reserve (Fed) soothed the market
On Friday, Minneapolis Fed President Neel Kashkari and Boston Fed President Susan Collins both discussed ways the Fed can “manage a dislocation, or pricing disruption, in the Treasury market…[the moves] are instruments designed to keep markets running smoothly by making sure there is enough liquidity, meaning financial institutions have access to the short-term funding they need to operate,” reported Nicole Goodkind of Barron’s.
Markets were soothed by the assurance that the Fed stands ready to “keep financial markets functioning should the need arise,” reported Stephen Culp of Reuters. By the end of trading on Friday, major U.S. stock indices were in positive territory. Yields on longer maturities of U.S. Treasuries also finished the week higher.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Private Advisor Group, a registered investment advisor. Private Advisor Group and Parks Wealth Management are separate entities from LPL Financial.
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Sources:
https://www.bloomberg.com/news/articles/2025-04-11/as-markets-sank-and-soared-a-new-fear-spread-across-wall-street or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-14-25-Bloomberg-As-Markets-Sank%20-%201.pdf
https://www.barrons.com/livecoverage/trump-tariffs-china-us/card/trump-tariff-pause-welcomed-by-world-leaders-but-china-tensions-mount-UP7utx6ARqUB3SJx2WaJ or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-14-25-Barrons-Trump-Tariff-Pause%20-%202.pdf
https://www.bloomberg.com/news/articles/2025-04-09/stock-market-today-dow-s-p-live-updates?srnd=phx-markets or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-14-25-Bloomberg-S&P-500-Tumbles%20-%203.pdf
https://www.investopedia.com/terms/s/safe-haven.asp
https://www.bloomberg.com/news/newsletters/2025-04-11/china-ups-the-ante-in-trump-s-trade-war-evening-briefing-americas?cmpid=eveus&utm_medium=email&utm_source=newsletter&utm_term=250411&utm_campaign=eveus or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-14-25-Bloomberg-China-Ups-the-Ante%20-%207.pdf
https://www.barrons.com/articles/fed-treasuries-bond-market-yields-stocks-5aaf4f24 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-14-25-Barrons-Fed-Knows-How-to-Stabilize%20-%208.pdf
https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/04-14-25-Barrons-DJIA-S&P-Nasdaq%20-%2010.pdf
https://www.smithsonianeducation.org/educators/lesson_plans/revolutionary_money/introduction.html
https://www.uscurrency.gov/sites/default/files/media/podcast/noteworthy-podcast-3-transcript-en.pdf
https://www.federalreserve.gov/faqs/money_15197.htm
https://www.investopedia.com/terms/f/1913-federal-reserve-act.asp
https://www.uscurrency.gov/about-us/currency-facts#
https://www.federalreserve.gov/faqs/how-long-is-the-life-span-of-us-paper-money.htm