Closing Thoughts for the Week

The markets enjoyed their first week of relative calm in nearly a month. I think the bond market is reading this right here and refusing to go straight into rally mode. I think yields are still elevated because bond traders are nervous that this could all reverse pretty quickly. Gold is definitely looking like it’s ready for a little consolidation.

Buoying sentiment has been the release of a series of backwards-looking economic reports, covering periods prior to the launch of the Trump tariff cycle, that make the U.S. economy appear to be in good shape. Consumer and business sentiment and expectations surveys since then reveal deep concerns about how the Trump tariffs have already had a negative impact on the economy.

There are almost too many moving parts right now to get a handle on everything going on, but let’s give it a try. Perhaps trade war escalation is hitting its peak and sentiment has room to improve here. In previous months, a significant drop in CPI and PPI numbers would have been more than enough to trigger a rally in equities. Not this time.