Weekly multi-asset update | Insight Investment

Source: Bloomberg and Insight Investment as at 27 Apr 2025.

• A survey of US households by the University of Michigan shows sentiment has deteriorated sharply since Trump’s tariff announcements; 64% expect business conditions to worsen in a year.
• This is the most negative result in the survey’s history since 1978.
• Negative sentiment around business conditions may foreshadow worsening hard economic data in the coming weeks and months, as uncertainty persists and the impacts from the tariffs start to materialise.

Significant market moves this week

Source: Bloomberg and Insight as at 01 May 2025. The price movement of each asset is shown next to its name. The data used by the bar chart divides the price movement by the annualised historical volatility of each asset.

Winners & losers: Japanese equities and US tech stocks gained, while commodities suffered some of the largest negative risk-adjusted moves.  

Over the past week, several things caught our eye:

• The market was relatively calmer this past week compared to the weeks following the 2 April tariff announcements. US equities achieved the largest 8-day gain since November 2020, when vaccines were finally made available during the covid pandemic, returning 8.7%. The market is becoming more optimistic around progress in trade talks between the US and China, and hopeful of the US finalising additional trade deals with its other main trading partners.
• Earnings season continued in earnest: Microsoft, Meta, Apple, and Amazon announced results, with bellwether companies such as Caterpillar, Visa, Eli Lilly, and Mastercard also reporting. The US tech sector rallied due to better-than-expected results from the likes of Meta and Microsoft. Most companies recognised the potential impact of tariffs but struck a balanced, rather than very pessimistic, tone regarding the economic outlook.
• The US dollar rallied and haven currencies such as the Japanese yen, Euro, and Swiss franc have given back some of their gains since 2 April as volatility has reduced.
• The Bank of Japan held rates constant as expected but cut its growth forecasts, given the uncertainty around US tariffs and their impact on Japanese exports, contributing to weakness in the Japanese yen over the week.

Asset allocation observation

Government bond yield curves continue to steepen

 

Source: Insight and Bloomberg as at 01 May 2025.

• Yield curves in both the US and Europe continued to steepen in recent weeks. The market has been pricing in growth concerns in the US and pricing in higher probabilities of rate cuts by the Fed in 2025. The short ends of yield curves have fallen by a larger magnitude compared to the longer ends of the yield curves, leading to steeper curves.
• Within our portfolios, we have a steepener exposure in both the US and Europe. We have recently trimmed some of the US steepener exposure, but we expect the longer-term steepening trend to continue, due to the macro backdrop.