Weekly Market Update 4-28-25
Markets calm a bit....can it last?
Last Week
Last week, reminiscent of the heady days of QE and Zero Interest Rate Policy, we had an everything rally! Both stocks and bond prices were up sharply, credit spreads tightened, implied equity and treasury volatilities fell, and a US Dollar somewhat stabilized. Why the rally? Perhaps because the verbal assaults from the White House directed at Fed Chairman Powell were toned down a bit. Additionally, President Trump had some relatively conciliatory comments on tariffs, specifically with China. Will it last? Probably not but we’ll take what we can get. Regarding the nastiness directed toward Chairman Powell, The President, probably counseled by Treasury Secretary Bessent, realizes that the Fed is a collegial organization. Even if the President could fire Powell, he would most likely end up with similar policy result unless he figured out a way to fire every voting member of the FOMC.
Now all we have to worry about is Stagflation! The final April numbers from the University of Michigan Sentiment survey show Americans are still factoring stubborn inflation along with declining prospects for economic growth. The Treasury had a relatively successful refunding week, auctioning 2-year, 5-year and 7-year notes with relatively little stress, which helped calm the markets some.
· The S&P 500 soared 4.58% for the week. The average daily move was an 1.86%.
· The NASDQ sprang up 6.74% for the week. The average daily move was an eye-popping 2.35%.
· The 2-year Treasury yield fell 5 basis points, closing at 3.75% on Friday. Year over year high 5.04% and low 3.54%.
· The 10-year Treasury yield declined 9 basis points for the week, closing at 4.24% on Friday. Year over year high 4.79%, and low 3.62%
· The VIX Index fell 16.2%, closing at 24.84 on Friday. Year over year high 55.33 and low 11.86
· The MOVE Index declined 7.72% for the week, closing at 105.79 on Friday. Year over year high 139.88 and low 82.49
· 5-year Investment Grade Corporates (as measured by Markit CDX) spreads tightened 4 basis points for the week, closing at 66 basis points on Friday. Year over year high 81 and low of 47.
· 5-year High Yield corporate debt (as measured by Markit CDX) spreads tightened 19 basis points for the week, closing at 405 basis points on Friday. Year over year high 476, and low 289.
· The US Dollar Index (DXY) rose 0.24%, closing at 99.47 on Friday. On Monday a new year over year low set at 98.28. Year over year high 109.65 and low 98.28
· WTI Crude declined 1.55% for the week, closing at 63.02 on Friday using the June WTI Futures contract. Year over year high of front contract 86.91, and low 60.90
· Gold, as measured by the June futures contract, fell 0.9 % for the week, closing at 3,298 on Friday. On Monday the gold futures front contract set a new all-time high of 3,425. Year over year high of front contract 3,326, and low 2,299.
The Week Ahead
We come in this morning with European equity exchanges up about 0.5%, while US equities off small. Treasury yields are up a bit, led by the long end of the curve. The highlights of the week will be 1st Quarter earnings from the “Mag Seven” (GOOG, META, AAPL, NVDA, AMZN, MSFT and TSLA) Wednesday and Thursday. We also have a huge economic data week, highlighted by JOLT Report Tuesday, Core PCE Thursday and April BLS Non-Farm Payroll Report on Friday. As it has been since March, we are one or two “tape bombs” away from either rallying or selling off sharply so be careful and be lucky.