Rate Hikes?

Few.

Despite ongoing geopolitical pressures and trying to determine what’s next from the Fed, the markets were little changed on the week as a whole. Treasury yields appear to be stabilizing and the VIX is subdued, reflecting a market that seems to be taking things in stride at the moment. In general, investors continue to believe that recession is not an imminent risk and that’s enough to add support for equities.

The soft data looks like it’s starting to line up with the hard data. Investor and consumer sentiment readings, especially those in Germany and the Eurozone, show a return to pre-Liberation Day levels as the trade war cools and begins taking a back seat in the eyes of the market. The labor market is still in relatively good shape with few signs of a broad slowdown. Inflation is elevated, but largely showing no ill effects from the back-and-forth tariffs. GDP growth still looks like it’s going to recover nicely in Q2. In all, it paints the picture of an economy that could be supportive of higher equity prices later this year as long as tariffs, war or some other tail risk don’t derail it.