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This Week’s Market Recap… 📊

A little over a month ago as Trump was about to take office as President, the 10-year yield hit 4.80%. Almost every economist and strategist were writing and putting out that the 10-year would hit 5% due to inflation from tariffs.

I wrote a piece a month ago titled, “The 10-year will not pass 5%.” I wrote how the inflation fears regarding tariffs were overblown, and that a 5% 10-year yield would not hold under current market conditions. 

Scott Bessent was confirmed as Treasury Secretary a few weeks ago, and the administration started talking about their focus on the 10-year yield. Trump and Bessent stopped focusing on the Fed Funds rate and started to pay more attention to the 10-year. This make sense for Trump as he wants to lower mortgage rates, and the 10-year is the interest rate linked to mortgages. 

As the administration's focus has gone to the 10-year, the rate has dropped from 4.80% to 4.25% today. The main reason the rate has dropped, in my opinion, is fear of an economic slowdown. Recent economic data has been relatively weak, and recent consumer confidence reports have also been weak. 

Some investors have stated that we could be in an upcoming period of stagflation. I disagree with this notion, and believe that even if growth slows slightly, inflation will not rise. I personally believe that if bond investors were worried about inflation, the 10-year would be much higher than it is today. It doesn’t make sense that the 10-year yield has decreased 11.5% if bond investors truly believed that inflation would reignite. 

I personally think the 10-year yield declining is positive for equities and will be a helpful catalyst for the market once we get out of this current period tariff scares. I also think that the fear of slowing economic growth is overblown. The indicator investors reacted negatively to on Friday was the University of Michigan Consumer Confidence report. The report indicated that consumers were worried about declining economic growth and rising inflation. When you look under the hood, this fear was skewed by Democrats in the survey. 

I do believe that we will see a continued period of choppiness in the market. With constant news and updates from Washington, investors will continue to stay on edge. I do believe that the market will understand more of the Trump administration’s policies by summer, and the market will ultimately have a good year.

Have a wonderful weekend!!

Top ETFs on our Radar… 📈

The iShares Expanded Tech-Software Sector ETF has performed exceptionally well this year. Software companies have shown strong performance as investors seek to identify the next big winner in AI.

Tune in every Monday and Friday for in-depth Market Analysis, Recaps, and a featured Stock & ETF.

Thanks for reading and have a great week!

-Ryan

@Theinvestingauthority