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FMI MARKET UPDATE

Persistent geopolitical issues continue to take center stage in economic news, but President Trump’s 90-day pause on tariffs has proven to be a significant support for overall market conditions. While the initial rally on April 9th faded, more positive developments began forming (i.e. trade deals, labor reports, etc.), laying the groundwork for a more sustained market rally. Volatility is still relatively high, but as more and more trade deals are inked, stability will creep back.

As expected, the Fed left rates unchanged on May 7th. Chair Powell’s commentary suggests that an uptick in inflation and stunted growth will be the result of President Trump’s tariff plan. CPI and PPI data for March, however, does not necessarily support a rise in inflation, although GDP for Q1 2025 was negative. April’s CPI and PPI data, set to be released on May 13th and 15th, respectively, will shed more light on the downstream effects of the tariff shadow.

No one can predict where the market will go from here, but the recent decline in volatility is definitely a sight for sore eyes. It’s important to remember, though, that the market’s short-term reaction is simply the result of President Trump questioning the international status quo. From an investment perspective, we maintain a long-term focus. As mentioned in last month’s letter, periods like this do not cause us to panic but rather to seek out opportunities.

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