Closing Thoughts for the Week

The markets continue to breathe a sigh of relief as trade war risks still appear to be contained and inflation readings came in below expectations. While large-caps and tech stocks led the way for the week as a whole, rallies from utilities and Treasuries during the latter half of it demonstrate that investors remain weary of getting too optimistic.

Investors seem to be settling into a new normal post-Liberation Day, but there are also indicates that their guard is still up. The Fed delivered a message following their meeting this week that was pretty much exactly as expected. At the earliest, I think that pushes the first potential rate cut until the middle of the summer, if not later. Overall, I think we need to keep watching the data that’s coming in.

We’re now starting to get some of the hard data that’s going to tell us two things - how consumers are reacting to tariff-induced higher prices and how businesses are handling the potential disruptions from the trade war. The labor market data was a mixed bag and stagflation could be a real problem, yet stocks continue to push higher. I think that’s because we keep getting small hints that countries are ready to end this trade war.