Top-Level Takeaways
- April was an eventful month for financial markets, beginning with President Trump’s Liberation Day announcement on April 2.
- Amid heightened market volatility, the White House announced a 90-day pause on “reciprocal” tariffs and pulled back on threats to fire the Fed chair.
- Consumer and business surveys have revealed sharp declines in sentiment, which have yet to flow through to hard data readings in a material way.
- The Fed has remained noncommittal regarding future policy amid trade uncertainty.
Sometimes a single month offers very little to contemplate from a market perspective.
April 2025 was not one of those months. Instead, the market experienced what felt like years’ worth of headlines and moves in a relatively short timeframe.
It all began with President Trump’s “Liberation Day” announcement on April 2, which entailed sweeping tariffs on all trading partners that far exceeded market expectations. As noted in last month’s commentary, the ensuing global market reaction was severe and swift across various asset classes.
The following week, the White House appeared to blink in the face of market turmoil with the announcement of a 90-day pause on “reciprocal” tariffs, while maintaining 10% baseline tariffs against all trading partners except China. Trade with China is effectively shut down with both sides charging tariffs of 125% or more. It’s now a waiting game to see potential supply shocks related to the stalemate.
Market volatility picked back up again when President Trump escalated his criticism of Fed Chair Powell for not cutting rates, suggesting that Powell’s termination was a possibility. The threats against Fed independence, along with the stalemate between the United States and China on trade relations spooked markets again. This prompted another pivot from the White House, with Treasury Secretary Bessent saying the trade war with China was “unsustainable,” and Trump backing down on his threats against Powell, relatively speaking.
This had some semblance of a “Trump put” for market participants, and demand for fixed income credit was notably improved in the last several days of April. It’s best to avoid a presumption of predictability with the current administration, but these were two clear examples of relenting in the face of heightened market volatility. Current spread levels remain wider than before the initial April 2 announcement but have partially retracted from the widest levels of April.
Visit ALM First to read more about the latest economic data and monthly market trends.
Jason Haley joined ALM First in 2008 and is the firm’s chief investment officer. He heads ALM First’s Investment Management Group (IMG), which is responsible for leading the investment process and investment theme development. Haley also oversees all capital markets activities, including portfolio management, trading, market research and commentary, and execution of hedging and funding strategies for the firm’s depository clients. He holds an MBA with a concentration in finance and a BBA with a concentration in marketing, both from The University of Mississippi.