Three Important Takeaways from Last Week
Last week was significant for the markets, and there has been a great deal of conflicting analysis in the financial media about what it means going forward. I wanted to take a moment to share my perspective on recent events and their potential impact.
Takeaway 1: The “Trump Put” Is Alive and Well
President Trump demonstrated a willingness to respond to market pressures by easing tariff measures on two occasions last week. On Wednesday, he announced a 90-day pause on reciprocal tariffs for all countries except China. Then, over the weekend, he exempted most consumer electronics—including iPhones and semiconductors—from the 145% tariffs on Chinese goods.
These decisions are encouraging for two reasons:
They reaffirm that tariffs are a negotiation tactic, leaving the door open for eventual global tariff reduction.
They show that Trump is sensitive to market performance and willing to intervene when conditions deteriorate.
Market Impact: These moves help remove a worst-case scenario for the markets. Before these announcements, there was concern the S&P 500 could drop below 4,500 if tariffs remained in place. With this policy flexibility—and the presence of both the “Trump Put” and the “Fed Put”—there’s a market backstop in place.
Takeaway 2: The Tariff Reversals Are Not a Signal to Buy
While the easing of tariffs eliminates some downside risk, it doesn’t remove the uncertainty that still looms over markets. Key questions remain:
Will reciprocal tariffs return in 90 days?
What’s the long-term direction of trade relations with China?
Until we see greater policy clarity, market volatility is likely to continue. As a result, I’m maintaining the current approach of 50% allocation to bonds.
If you hold American Funds, I recommend scheduling a call with me so we can review some adjustments I’d like to propose.
Market Impact: Expect a choppy trading range between the upper 4,000s and mid-5,000s on the S&P 500. The market currently favors:
Defensive sectors (utilities, staples, healthcare)
Minimum volatility fixed income
Market broadening (e.g., RSP over SPY)
While conditions could eventually improve and make cyclical and tech sectors more attractive, now is not that time.
Takeaway 3: Monitor the 10-Year Treasury Yield and U.S. Dollar
The current concern isn’t just tariffs—it’s the policy uncertainty that’s starting to erode confidence in U.S. markets. That concern is beginning to surface in two critical markets: bonds and the U.S. dollar.
Given the broader policy framework, we would normally expect the 10-year Treasury yield to be lower and the Dollar Index to be higher. However, last week saw notable selling pressure in both, which may be signaling global investors’ unease.
Market Impact:
If the 10-year yield exceeds 4.80%, it could act as a new headwind for stocks.
If the Dollar Index falls toward 90, it would indicate declining demand for U.S. assets—an additional broader negative.
Bottom Line
Last week was constructive for markets in that it removed an immediate crash risk and reaffirmed the presence of market-sensitive policy responses. However, it did not eliminate volatility. Until more clarity emerges on trade and economic policy, the S&P 500 is likely to trade in a broad 4,900–5,400 range.
If you have questions or want to review your positioning in light of this outlook, please reach out.
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