Closing Thoughts for the Week

We’re now starting to get some of the hard data that’s going to tell us two things - how consumers are reacting to tariff-induced higher prices and how businesses are handling the potential disruptions from the trade war. The labor market data was a mixed bag and stagflation could be a real problem, yet stocks continue to push higher. I think that’s because we keep getting small hints that countries are ready to end this trade war.

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.