April 19, 2025 Market Update
Markets attempted to stabilize this past week following last week’s historic swings. Equities benefited from better-than-feared earnings reports and a temporary lull in trade-related headlines. That said, gains were uneven and investor sentiment remains fragile.
The bond market remained volatile. After surging last week, long-term Treasury yields edged lower in the first half of the week before climbing again on Thursday. While the moves last week were less extreme than those seen earlier this month, the tone remains cautious.
Investor confidence remains tentative, and markets appear highly sensitive to political headlines. With tariffs, monetary policy, and fiscal issues all in flux, the potential for sharp, short-term swings—up or down—remains elevated.
After a strong start to the year, markets have grown increasingly unsettled due to the uncertainty created by rapidly changing tariff policies and the geopolitical tensions they’ve helped fuel. Tit-for-tat tariff increases have complicated the outlook for economic growth, disrupted market trends, and shaken Mr. Market’s confidence. As a result, economic and market uncertainty has reached levels we rarely see.
The recent surge in market volatility has also impacted the effectiveness of the data our systematic investment strategies use to recommend asset, sector, and style allocations for our model portfolios. When markets are moving rapidly in response to headlines rather than fundamentals, it becomes harder for rules-based models to distinguish between noise and meaningful trends.
In response, we’ve decided to temporarily impose strategic limits to the extent on which our strategies can overweight or underweight equities or fixed income. We also expect to apply similar limits to sector and style exposures. These adjustments will bring client portfolios into closer alignment with each individual’s long-term benchmark allocation.
This strategic decision reflects two of our core beliefs. First, while we don’t attempt to time short-term market moves, we do believe it’s important to understand that event-driven market declines have the potential to materially affect long-term portfolio outcomes.
Second, we recognize that periods marked by sharp reversals and policy-driven market swings can make it harder for systematic investment strategies—like the ones we employ—to adapt quickly. In such an environment, we believe it’s prudent to adopt more neutral positioning until conditions stabilize.
We’ll continue to monitor developments closely and will be ready to return to our strategy-recommended model portfolios once the market environment shows signs of stabilizing. In the meantime, we believe this measured approach strikes the right balance between risk management and growth. Please let me know if you feel otherwise
That’s all for now. Have a great weekend and invest wisely, my friends.