Good Tuesday AM from your Hometown Lender,

Another slow day for economic news with the only print being the Richmond Fed manufacturing index.

I would typically never even mention it as it is not a market mover, but it cratered and dropped more than 3x from where it was just last month. If you are questioning an economic slowdown, that’s a good place to start. Additionally, The International Monetary Fund lowered its 2025 projections for U.S. growth to 1.8%, reflecting a cut of 0.9 percentage point from the forecast it delivered in January.

Treasury Secretary Scott Bessent this morning leaked out that the trade war with China is unsustainable and he expects a de-escalation (a deal will be made). With that, equities increased their gains. Bonds are not reacting at all. The 10yr is at 4.38% and marginally better. We need some definitive tariff news to move bend the markets meaningfully in our direction.

Matt Graham had a good piece…

If there was an overriding theme last week, it was that the absence of new tariff drama helped the bond market recover some of the previous week’s weakness. While it wasn’t exactly tariff drama, yesterday’s “Trump vs Powell” headlines served a similar purpose in that they spooked markets and caused selling across the board. Now today, traders are buying the dip in bond prices (cautiously) amid an absence of additional escalation in yesterday’s drama. Could escalation reemerge? Certainly. And if it does, markets will react. Until then, no news is good news, but not good enough to undo more than fraction of the previous day’s damage. Indeed, this will be an ongoing theme (i.e. a certain–sometimes large–portion of the damage associated with such events will NOT easily be erased, even if the risk is seemingly defused).

Stay safe and make today great!