Weekly Market Update (April 13, 2025)
HIGHLIGHTS
Market volatility stayed high due to the global tariff uncertainty. Equities dropped sharply before rebounding after the announcement of 90-day tariff pause. Gold went up and hit new record high again with over 6% gain over the week.
- Currency: US dollar dropped this week amid the trade war uncertainties, while other currencies increased. Euro, Yen and Swiss Franc moved up 3.3%, 2% and 5.5% respectively. The 1Y risk reversals flipped to the US dollar downside for the first time in 5 years.
- Inflation: US Consumer Price Index (CPI) dropped for the first time in 5 years, mainly driven by the lower costs of travel, energy and used vehicles. However, tariffs could potentially reignite inflation. Markets expect a delayed reflection in consumer prices, and some companies have already warned of increase in prices.
- China: CPI and Producer Price Index (PPI) in China dropped again amid escalating trade tensions with US. US raised the tariff on China to 145% and China increased retaliation tariff to 125% in response. Markets expect that the deflationary economic data will trigger more monetary easing policies to stimulate the economy.
MARKETS
| Nasdaq | 16,724.46 | +7.29% |
| S&P 500 | 5,363.36 | +5.70% |
| Dow | 40,212.71 | +4.95% |
| 10-Year | 4.49% | +51bps |
| Brent | 63.99 | -2.97% |
| DXY | 99.78 | -3.02% |
*Data as of market close. 5-day change ending on Friday.
VIEW FROM THE STREET
Equity
UBS: US equities are attractive. The 90-day pause has reduced the extreme economic and market tail risks. News flow is likely to improve as more countries want to negotiate with the US, and Trump administration is more incentivize to demonstrate success. Variety of deals are expected. Besides, equity returns after high volatile period have been positive historically.
Standard Chartered: S&P500 has increased 5.7% after the announcement of 90-day tariff pause. This partially offset the initial 19% drawdown previously. Historically, when S&P500 dropped more than 10% from its peak, there was 61% likelihood of gain by the year-end.
Fixed Income
Goldman Sachs: US treasury 10Y yield jumped 43bps to near 4.5% this week, implying that it is losing its role as safe haven, especially among foreign investors. However, demand is still strong, supported by the results of $39 billion 10Y auction and $22 billion 30Y auction this week. Markets are pricing 85bps cut this year.
UBS: The expected bond rally can offer great total return potential and diversification benefits. In a downside scenario, we expect 10Y treasury yield to drop to 2.5%, providing significant capital gains for investors.
Economy
Morgan Stanley: Although the universal tariff may simply be the opening gambit for negotiations, the regressive taxation at this level would likely harm economic growth and push inflation higher, at least in the short term.
J.P. Morgan: The job market appears to be strong in Q2, but it is still too early to see the full effects of recent policies, including the immigration policy. As the native population growth has decelerated, the US has relied on rising immigrant population to drive long-term economic growth.