Early in the week, markets notched steady gains as investors awaited key economic indicators and monitored ongoing trade discussions. Megacap tech names—particularly AI chipmakers—led the broader market higher, as sentiment stayed bullish on prospects for a U.S.-China trade deal.
Outlook
Pricing power remains a growth lever, but volumes are showing strain. The new tariff regime is set to test the limits of pricing power further. Companies are still managing to push through price gains, but elasticity is no longer negligible. And tariffs threaten to raise input costs, squeezing margins.
When you take seven assets from various parts of the market, and six of them say one thing while one says something different, you wonder what that one asset knows that the others don’t.
The recent spike in U.S. 30-Year bond yields reflects investor concerns over long-term debt sustainability and fiscal policy shifts. Rising 30-Year yields in other major economies point to a global aversion to long duration, not just a U.S.-specific issue.
Despite the dollar’s recent weakness, the structural advantages of deep and liquid US financial markets, its dominant role in trade invoicing and as a monetary anchor, are sustaining its primary reserve currency status.
The primary focus this coming week will remain on the bond market, with the Treasury auctions drawing significant attention. These auctions should fare better than last week’s poorly received 20-year auction.
The increasingly confrontational developments related to cross-border commerce have pushed all major equity benchmarks and sectors into the red, as well as the greenback.
With the labor market already in balance, tariff risks greatly diminished amid ongoing negotiations, and the Fed Funds rate still in moderately restrictive territory, we believe that the Fed should calibrate rates lower.
Stocks pushed higher on Monday as investors cheered weekend news that the US and China temporarily agreed to back off steep reciprocal tariffs
Stocks are climbing up again as this morning’s lighter-than-expected CPI print bolsters spirits following yesterday’s optimism sparked by tariff reprieves between Beijing and Washington.
Given the technical and fundamental backdrop, any initial gains could quickly fade, underscoring the importance of caution as markets navigate this significant technical and macroeconomic inflection point.
The prospects of tariffs continue to dominate investor anxiety. Effects from tariffs will be on consumers and corporations alike, with both likely sharing the brunt of higher prices.