The Certainty Of Uncertainty

2025-03-14 11:30:00 ET

Summary

• The sharp climb in uncertainty in the last seven weeks since President Trump was inaugurated for his second term has been brought on by on-again, off-again tariff policies that have even Congress confused as to the final disposition of tariffs, reciprocal or otherwise.
• The US Treasury 10-year yield rose from 3.70% in mid-September, when the Fed began to cut short-term rates, reaching 4.43% right after the election and touching 4.80% a week before the inauguration. Since then, the 10-year yield has fallen to 4.25%.
• The S&P 500 is in correction mode, with the index down 8.73% from its peak on February 19, 2025. P/E ratios certainly got stretched, particularly in the tech sector, so some of this is reversion to the mean. But the wealth effects can also affect consumer spending, and we will be watching that measure closely.

By John R. Mousseau, CFA

Both the equity and fixed-income markets have been dealing with higher levels of volatility in the past few weeks (winner - equities). But the uncertainty, of course, comes out of left field (as it usually does)....

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