This week on 7 Market Movers, Portfolio Consulting Director Aya Yoshioka discusses the recent labor market report, changes in inflation numbers, and the latest updates with the government’s trade negotiations. She also touches on how fiscal policy has been impacting the bond markets and the weakening dollar, down 11% since January highs. Watch to learn more.

If you have further questions about how the current economy and market environment could affect your financial plan, reach out to a Wealth Enhancement advisor today.

TRANSCRIPT:

Hi, everyone. My name is Aya Yoshioka. I'm a portfolio consulting director and senior investment strategist here at Wealth Enhancement. Thanks for joining me again for another episode of seven market movers. Let me recap sort of what has happened so far, from an economic data standpoint over the last week or at least since we last did these videos.

Last Friday, we got a great labor market report where we added 140,000 jobs nicely above expectations of adding only 126,000 jobs, and the unemployment rate stayed steady at about 4.2%. So, again, having a strong labor market really is an indicator that the economy remains very healthy here.

We also saw, the CPI numbers this week, in which we saw the headline CPI number at 2.4%, and that was pretty much in line with expectations. If you exclude food and energy, the number was 2.8%, which is probably closer to what we all are feeling when we go to buy anything. But that was also slightly better than what economists were expecting.

They were really penciling in 2.9%, and so having it come in slightly better than expected has really proven that a lot of this hard data that we're, tracking from an economic standpoint continues to me to remain relatively healthy relative to sort of the soft data, a lot of the sentiment data or the survey data that can, come out, from an economic data standpoint. Overall, the inflation numbers were held down by lower airfares and lower prices on, clothes and autos.

So when we started this series on 7 Market Movers, you know, we really believe that there are seven different areas that can impact markets. And just to recap, that includes global economic growth, interest rates, inflation, fiscal policy, monetary policy, global macro risks, and, investor confidence. And of these movers, the one that has been moving the markets the most this year, you guess it, it's fiscal policy. So fiscal policy has been front and center in 2025. You know, there are years in which in which, Washington really does take a back seat, but not so far in 2025. So fiscal policy has shown up in trade policy as well as in tax policy. There's still a lot of debate going on about, the impact of, the taxes and what the changes will be in this One Big Beautiful Bill.

But, you know, the fiscal policy is really impacting our bond markets, and that's why, it's a little bit more tricky this year in 2025. You know, fiscal policy and what this is doing to our deficits and our overall debt burden, is, you know, creating a lot of concern, that, you know, our deficits are getting too large.

And at these levels of interest rates, we're now seeing an interest expense that continues to, creep into the overall, spending, on the government side. And this is really reflected in, you know, the bond market. And so having a steady bond market has been, something that we've all been watching.

To that effect, we've seen solid bond auctions this week. So we had good auctions, in the bond market and the treasury market, on the ten year and the third year. So longer dated treasuries, which again, that indicates healthy demand for treasuries, which was seen as a overall positive. Again, we saw lower rates over the last week or so.

Having these yields come down is a positive for the bond market. And, again, this is a reflection of the cost of capital, and it really impacts everything, in terms of valuations, whether it's equity markets, or the cost of borrowing.

So with that, you know, we also saw solid sort of recent trade negotiations, with China, and it seemed like, treasury secretary, Scott Besant noted that there is a high likelihood that those, July 9th, reciprocal trade deadlines would get pushed out, as we continue to negotiate with our trade partners.

And with that, the S&P 500 is back above 6,000. Woo hoo. Just 100 points shy of that, you know, February 19th high watermark. And that's only a little over 1.5% percent away from where we are right now.

And tech has really led the charge as we saw from, first quarter earnings and NVIDIA. AI continues to proliferate, And tech is up about 18.5% from those April lows.

However, you know, I think the concerns in, markets are still being reflected in the currency market, and you can see that, with the US dollar, which has weakened, so far in 2025, it's down 11% from its January highs.

So the big question is, are we in the clear, with tariffs? Are tariffs old news? Or are we going to see more sort of rattling as we go through the summer? Stay tuned for the next episode of seven market movers, and hopefully, we'll be able to answer some of those questions. But in the meantime, please reach out to your financial adviser if you have any questions. Thanks again, and we'll see you again next week.

This information is not intended as a recommendation. The opinions are subject to change at any time and no forecasts can be guaranteed. Investment decisions should always be made based on an investor's specific circumstances. Investing involves risk, including possible loss of principal.

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