Stock and bond prices rose last week, creating a bit of breathing room for investors. The Standard & Poor’s 500 is now at about the same level as last year. Unfortunately, that means that we’ve lost all of the gains of the second two-thirds of 2024. Early last week, comments from Treasury Secretary Scott Bessent calling the trade war with China “unsustainable” encouraged investors to get back into the markets. In addition, the president spoke late on Wednesday and said that tariffs on China “won’t be anywhere” near the 145% that prevails today.
Bonds moving up means that people are no longer selling everything American. Someone is buying Treasurys, pushing those prices up and yields down. For investors who already own the bonds, this is good news. For people looking to buy, of course, higher yields are better. But there are ramifications to the yields on Treasurys. Mortgage rates tend to track the movement of the yield on the 10-year Treasury. (Regular thirty-year mortgages are hovering just under 7% at this time, and nobody likes that.) Lower yields thus benefit home buyers.
Existing home sales fell 5.9% in March, the biggest drop since November 2022. It’s the same old story in real estate: low inventory because people sitting in attractive mortgages don’t want to sell, high prices because of low inventory, and above-average mortgage rates. Oh wait, today’s mortgage rates are NOT above average. According to Rocket Mortgage, the average 30-year mortgage rate between 1971 and 2025 was 7.71%. Now, I bought my first house at 14.5% because I was young and stupid, but today’s house shoppers are too smart to fall for that. Still, a wise person (I have no idea who) recently reminded us to “buy the house and rent the rate,” meaning that your mortgage can be refinanced if rates go down.
The median existing-home sales price rose over the past twelve months to $403,700 – the 21st straight month of year-over-year price increases. But the inventory of unsold homes also rose in March by 8%, giving buyers the hope that if inventory continues to increase, prices may start to fall.
Uncertainty in the economy, due to the tariff on-or-off machinations of the government, caused investors around the world to sit back and wait. Now that most tariffs are on hold, and some have been abandoned (we see you, auto parts), investors are wading back into the water. But one commodity not in favor yet is the U.S. dollar. Earlier THIS YEAR (February), it took $1.03 to buy a Euro. Since then, the dollar has fallen in value to the point where last week it took $1.15 to buy a Euro. We currently sit at $1.14. That’s a drop of more than 10% in the value of the dollar this year – which puts us in correction territory. As the dollar has weakened, money has flowed into gold, pushing gold prices to record highs. While there are industrial (and jewelry) uses for gold, the rationale for owning gold has largely escaped me. It’s not like people can eat gold in a recession. But I can’t argue with results. Asset allocate!
Global investors (and foreign governments) buy dollars so that they can purchase U.S. Treasurys or American goods. That demand has been frail of late, indicating that international investors are passing on our bonds AND our products. Tariff talk caused this lack of interest. The tariffs, if enacted, would increase costs for American consumers, possibly leading us into a recession, or worse, stagflation. After decades of being the place to be, investment-wise, the U.S. is slipping.
Meanwhile, the Chinese government has been canvassing businesses to find out what American goods and parts cannot be replaced domestically and then exempting those goods from tariffs. Smart. Authoritarian, but smart.
For the week ending on April 25th, the S&P 500 finished at 5,525, the Dow Jones Industrials at 40,113, and the Nasdaq Composite at 17,382. The yield on the ten-year Treasury closed at 4.266%. U.S. crude oil cost $62.94 per barrel, N.Y. gold cost $3,277.00 per ounce, and one Euro was worth $1.14.
Elizabeth E. Cook
Partner, Diastole Wealth Management
News and information presented here was gathered from sources believed, but not guaranteed, to be reliable, including (but not limited to) The Wall Street Journal, The New York Times, The Washington Post, USA Today, Barron’s, Bloomberg, MarketWatch, Yahoo Finance, Axios, The Economist, CNN, CNBC, Business Insider, 1440 Digest, Reuters, The National Association of Realtors, Rocket Mortgage, and The Associated Press. If you have questions, please call us at 203.458.5220, or reply to this email to reach me, Liz Cook.
Last weekend, 20,000 people ran the Beijing half-marathon. And about 20 robots joined the crowd for the 21-kilometer race. They were vaguely humanoid in shape, but were notably running WITH human handlers who could adjust robot speed and direction using handheld controllers. Only six humanoid machines completed the course, and the fastest robot still took twice as long as the fastest human to finish the race, but it proved that robots have improved dramatically of late. Five years ago, robots couldn’t really even walk. Wheels are still much faster, but not so great on stairs.
And in a related story, U.S. fertility remains below replacement levels. Robot anyone?