DFG Navigator Archives | April 2025

Your Capital Markets Snapshot: Heightened Volatility Persisted Last Week

Heightened volatility persisted last week, this time to both the up and downside as markets reacted to the news of pauses on reciprocal tariffs to all countries that did not retaliate. China was notably excluded and the back-and-forth escalation in tarifflevels with the US added to the volatility experienced last week. Equity markets rebounded off their recent skid but are still well off their February highs. Following the announcement of the tariff pauses, equity markets sharply jumped and posted one of the largest daily gains since World War II. Increased volatility should be expected in the near-term until more certainty emerges around the future of US and global trade policies. Breaking with typical market behavior, US Treasuries and the US Dollar experienced selloffs during this recent volatility shock. Often viewed as “safe haven” assets that investors seek during these episodes, instead last week saw a steepening of the yield curve as long-term rates rose by around 50 basis points.

Your Capital Markets Snapshot: Navigating Volatility with Long-Term Confidence

Volatility continues to be the theme of 2025. Last week, the markets experienced a sharp selloff to end the week following the announcement of aggressive U.S. reciprocal tariffs by President Donald Trump. The tariffs, which included a 10% minimum on all imports and higher rates for countries with larger trade deficits, led to retaliatory measures from China. This sparked risk-off sentiment, causing equities to finish the week sharply lower and U.S. Treasury yields to decline to their lowest since October 2024. Despite the headwinds posed by tariffs, the U.S. economy entered this period from a position of strength, with healthy household balance sheets and labor-market conditions. Investors are advised to stick with their long-term investment strategies, emphasizing diversification to navigate the ongoing market volatility. As we have discussed previously, we believe time in the market is greater than timing the market.

Market Update: April 4, 2025

In today's complex financial landscape, staying informed is key to making sound investment decisions and creating a secure financial future. Our job at DFG is to help our clients navigate the changing financial landscape within the context of their personal financial plan in a way that brings them confidence, comfort, and security. Toward this goal, below is the latest Market Update issued by Daken Vanderburg, CFA, the Chief Investment Officer of MassMutual Wealth Management, which provides commentary on the current state of the economy and explores the impact of tariffs on the markets.As always, the Davis Financial Group Team wants to hear from you – please share your thoughts, questions, and ideas with us at info@davisfinancialgroup.com or give us a call at (413) 584-3098.CRN202803-8317719

Your Capital Markets Snapshot: Tariffs, Inflation, and Market Volatility

Last week, equity markets experienced significant volatility due to the announcement of a 25% tariff on all non-U.S. made autos, which is set to take effect on April 3. This move led to a decline in shares of automakers and parts suppliers, particularly in countries with large auto exposure like Germany and South Korea. Additionally, consumer confidence waned, and core PCE prices increased more than expected, suggesting higher inflation pressures and further dampening investor sentiment. Personal spending came in softer than expected, indicating higher prices might be impacting consumer behavior. Despite these challenges, corporate profits are rising, and the private sector continues to add jobs at a healthy pace. The Federal Reserve is maintaining a wait-and-see approach before taking any further action with respect to interest rates. Once the focus on tariffs passes, there is potential for pro-growth policy measures being announced in the second half of the year. Given the heightened uncertainty in the markets, it remains prudent to ensure portfolios are sufficiently diversified.

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