Monday, April 14th, 2025
By Laura Kuntz, CPA/PFS, MBT, Chief Investment Officer
Many of us are tuned into the recent volatility in the stock market. And you may also have heard about some volatility in the treasury bond market last week — that appeared to have influenced the administration in Washington to moderate tariffs.
U.S. Bond Markets. Starting last week on approximately Tuesday, U.S. treasury bonds* appeared to be under some stress due to selling. The movement representing this change was small but economists (and, it appears the administration) became concerned.
The deepest concern is that about one-third of U.S. treasury debt (our national debt) is held by international owners, including China. The worry is that an anti-American sentiment, a loss in confidence in U.S. policy, or an international retaliatory strategy could cause other nations to sell U.S. bonds. Such sales would decrease the price of U.S. treasuries, increasing the U.S. interest rate on those bonds, and in an especially negative scenario, destabilize U.S. treasury bond markets.
Janet Yellon, Economist, Former Federal Reserve Chair, and Former Treasury Secretary in the last administration, was quoted by Bloomberg today as saying that while a potential loss in confidence in U.S. assets is worrying, the Federal Reserve Board would have the capacity to step in to shore up values, as it did during the pandemic downturn of 2020. She also indicated that she was pleased that the auctions of U.S. Treasuries last week went well. She addressed China’s large holding of treasuries, saying, “China, if they were to sell dollars [often held in treasuries], would be pushing up the value of their own currency and creating risks to global financial stability that would harm them – and would represent a very significant escalation. So, it’s not something that I would expect China to do.”**
Today, April 14th, treasuries* are slightly positive.
Global Interdependence May Offer Guardrails. The global economy is highly tied together. The largest 500 companies in the U.S. receive approximately 40% of their revenues from abroad. This treasury episode also highlights another area of interdependence, and how that interdependence may serve to influence U.S. action. That said, we are expecting volatile markets for some time to come.
Please let us know your questions and comments, and if you would like to connect to discuss your portfolio, your financial plan, and the investment markets. You can review your portfolio results on your LWP portal and compare them to various indices via the “Account performance” tax. We always appreciate connecting with you.
NOTES
* As represented by the iShares U.S. Treasury Bond ETF (Govt). This fund offers exposure to U.S. Treasuries ranging from 1 to 30 year maturities and seeks to track an index composed of U.S. Treasury bonds. Bond investments, including treasury bonds/notes are subject to interest rate risk and quality risk.
** “Yellon Says Treasuries Show US Confidence Loss, Not Dysfunction,” Bloomberg.com, April 14, 2024. By Christopher Ansley.
IMPORTANT NOTICE AND DISCLOSURE
The foregoing content reflects the opinions of Laurel Wealth Planning LLC and is subject to change at any time without notice. Content provided herein has been obtained from sources considered reliable, but we do not guarantee the accuracy, or the completeness of any description of securities, markets, or developments mentioned. The content is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. LWP is a wealth management firm and does not practice law or accountancy.
Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.
As a precautionary measure, we cannot rely on e-mail requests to authorize, direct, or affect the purchase or sale of any security, wire transfer, or to affect any other transactions. Such requests, orders, or other instructions sent via email should be confirmed verbally, or by written instructions faxed to 952-854-6250 prior to their anticipated execution. We are unable to ensure that email sent to you from us, or sent from you to us, will be received. Please contact us at 952-854-6250 if there is any change in your financial situation, needs, goals, or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions. Additionally, we recommend that you compare any account reports from Laurel Wealth Planning LLC with the account statements from your custodian. Please notify us if you do not receive statements from your custodian on at least a quarterly basis. Our current disclosure brochures, From ADV Part 2 and Form ADV Part 3, are available upon request and on our website, www.laurelwealthplanning.com. This disclosure brochure, or a summary of material changes made, is also provided to our clients on an annual basis.
Laura, the founder of LWP, is a Senior Wealth Manager, Chief Investment Officer and Shareholder. She has a master’s degree in tax and is an excellent listener. While she is a sophisticated financial planner with experience in complex issues, her priority is ensuring a financial plan works for people.
