Stocks and bonds rally as Treasury yields hold at 4.38%, foreign demand surges despite tariff fears

• Stocks and bonds rise.
• Bessent says don’t worry/Yellen says it’s a crisis of confidence.
• It’s TAX day!
• Gold up, Oil flat, yields down.
• Import/Export price index today – What will it reveal?
• Try Steak Florentine.

So stocks and bonds kicked off the week on an uptick…..The Dow up 315 pts, the S&P up 43 pts, the Nasdaq added 107 pts, the Russell up 20 pts, the Transports rallied by 164 pts, the Equal Weight S&P up 80 pts, while the Mag 7 got failed to follow suit….falling 16 pts – which is essentially flat….AAPL gaining 1% while META lost 2.2%, AMZN – 1.5%, MSFT -0.2%, GOOG +1.3%, TSLA 0%, NVDA – 0.2%.

Bonds rose – the TLT up 0.7% while the TLH gained 1%. Leaving the 10-yr yielding 4.38%, while the 2 yr is yielding 3.85%. Scotty (Bessent) – Treasury Secretary - telling Bloomberg that he is not in the camp that foreign investors are ‘selling the US’…..in fact he points to data that suggests INCREASED foreign demand at the recent 10 yr and 30 yr treasury auctions last week.

To support that argument, the Head of global fixed income at JPM – Bobby Michele reports that foreign investors are telling JPM that they are not shunning US debt….and cited FED data that reveals foreign central banks have boosted their holdings of treasuries.

Which goes to my point about markets (stocks, bonds, houses, tulips….) – there are both buyers and sellers – bonds, like stocks ‘don’t just vanish! Every sale has a buyer on the other side. So when someone sells – they have to sell it to someone – you need both sides – and like stocks – when the anxiety builds – buyers are the ones in control – they pick the price (lower) and if the sellers are anxious enough they ‘hit the bid’ (they don’t offer, they just hit the bid) and prices decline (and for bonds – yields rise)….conversely when the mood shifts and the buyers are aggressive – it is the sellers that take control – they offer at higher prices and if the buyers really want it – they ‘take the offer’ (they don’t bid, they just take the offer….) and prices rise (and for bonds – yields fall).

So, the idea that “everyone” is selling bonds oversimplifies a complex market. Everyone can NOT be selling……because that suggests there are NO buyers…and that clearly is not the case.

Bond sell-offs (like stock selloffs) reflect specific triggers—like tariff fears, inflation expectations, or forced liquidations, earnings (sellers could be: hedge fund margin calls, cash needs, balance sheet management, ETF’s that need to rebalance risk, individuals and yes some foreign selling for sure)—but demand always persists. (buyers could be hedge funds, foreign central banks, actively managed bond ETF’s, pension funds, insurance companies and individuals). I mean think about it – if Fidelity is selling AAPL – The Capital Group might be buying AAPL, or if AIG (insurance company) is selling 10 yr bonds, you might have the Germans (foreign country) buying 10 yr bonds…. - all are just managing risk – and they all have a view about current valuations…. The same way you do when you buy or sell a stock. This is NOT complicated – in the end - rising bond yields will bring out plenty of buyers.

Yesterday – Janet Yellen took to the airwaves to stoke the flames…saying that falling bond prices and a falling dollar are all indicative of foreign investors that are shunning the US – saying that the weakness suggests a loss of confidence…this from the woman who chose NOT to refinance long term debt (10’s and 30’s) at 1.5% during the early 2020’s….when she could have….which as we discussed – suggests a massive error in judgement…..because now we have to refinance that same debt at 4%+ levels.

Look – our bond market is $50 trillion in size (1/3 of the $150 trillion global bond market) and the global reach means diverse players—central banks, institutions, speculators— that ensure liquidity, even in stress. – The same way it happens in the stock market.

It’s comical really…..which is why I keep saying that if the recent market action is giving you undue stress – you need to re-evaluate what you own.

Now – to that point – look at what is happening with GOLD. Have you seen it lately? It is up $15 today - trading at $3,241/ oz. It is up 21% ytd – on top of the 22% last year. So what does that say? If everyone is buying gold? Then WHO is selling gold? I mean, you have to buy it from someone! I don’t hear anyone screaming about rising gold prices….in fact – all we hear is how good gold prices are and have been…and just fyi – I think gold is becoming a crowded trade – but it can and will continue to rise until we get clarity on trade, tariffs, earnings, and fed policy.

Oil is holding tight at $61.30 and remains in the $60/$68 trading range.

This morning stocks in Asia are all higher…. on the hopes that something is happening.

In Europe – investors there are going on a shopping spree (scooping up names that have been artificially mispriced) – Euro Stoxx + 0.7%, UK +0.9%, France + 0.3%, Germany + 1.1%, Spain + 1.1% while Italy is in the lead (again) – gaining 1.6%.

And US futures? They are churning…. only because the headlines remain very ‘fluid’. Dow futures up 20 pts, the S&P’s up 3, the Nasdaq up 50 pts while the Russell is flat.

Eco data includes: The Empire Manufacturing and Import and Export price index. This index is published monthly by the BLS and measures the average change in prices of goods and services traded between the U.S. and the rest of the world. These indexes provide critical insights into inflation, trade dynamics, and economic conditions. The import/export price indexes are particularly relevant to the bond market’s recent pressure:

Inflation link: Rising import prices fuel inflation expectations, pushing bond yields higher (and prices lower) as investors demand compensation for eroded returns. This aligns with the 10-year Treasury yield spike to ~4.5% in early April 2025.

Tariff impact: Trump’s tariff proposals, a key driver of recent bond selloffs, could amplify import price increases, raising inflation and further pressuring bonds. Higher yields reflect fears of sustained price pressures.

Global demand: Weak export price growth signals softer global demand, which could temper U.S. growth and affect Treasury demand if foreign investors (e.g., China, Japan) scale back purchases amid trade disputes.

Fed policy: The Fed monitors these indexes to gauge inflation and trade health. Persistent import price rises could delay rate cuts, keeping yields elevated, while weak export prices might prompt easing if growth falters. Today we are expecting import prices y/y to be up 1.4% with export prices up 1.8%.

In the end –. the markets are very anxious and will react dramatically to every headline… Just to be clear - this is not over yet….Earnings will cause some distractions - investors will try to focus on the broader economic conditions, the earnings data and more importantly – the earnings guidance – BUT the news out of DC will continue to dominate the headlines, so expect the turbulence to continue.

The S&P closed at 5405 – up 42 pts…. – the earnings parade continues….JNJ, PNC, and BAC all reported and BEAT…..so far we are running at a 90% beat rate…I know – it’s only 3 days Kenny, so slow down….Remember – it is tax day today and it is a shortened trading week. Expect volumes to decline as we move into Thursday…Friday markets are closed for Good Friday.

My sense is still that we are closer to a bottom than not….. We remain in the 4835/5775 trading range…expect volatility to continue until we get more clarity on trade and rates…period.

Steak florentine

You will need: The steaks – you need a nice thick steak, Garlic cloves, Pork fatback, dried rosemary, coarse salt (kosher salt works nicely) and pepper.

Rinse under cold water and pat dry with a paper towel. Leave on a platter for about 20 mins so that they get to room temp.

In a food processor blend the pork fatback, garlic, rosemary to a paste like consistency. Next - wash your hands and massage this mixture into the steaks - taking time to make sure that you have worked the meat and the mixture well. Now season with S&P. Set aside.

Light the grill and turn the heat to high and allow the grill time to heat up - it must be nice and hot. Place the steaks on the grill and cook for about 4 min/side - depending on thickness - This will result in a med rare steak...so if you add a couple more mins on each side you will get a more cooked center.

Remember though - when you remove the steaks from the grill - you will cover and let them rest for 4 mins allowing them time to continue cooking and allowing the juice to flow. Once ready serve immediately on warmed plates. Mashed potatoes and peas always work well with this dish along with a mixed green salad with red wine vinaigrette dressing.

This meal deserves a robust red wine - my favorite is Brunello di Montalcino.