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Five in Five
Welcome to Five in Five, a monthly publication that shares graphs on five key topics, illustrating the current state of the markets. Each edition includes brief commentary that can be easily read in five minutes or less. We hope you find this concise analysis helpful and informative.
May 2025
This month’s Five in Five covers the following topics:
- Fed Funds Rate
- Municipal Bonds
- Manufacturing Slides, While Services Rebounds in April
- Two “Essential” Sectors, Two Different Results
- Stock Market Performance Over “The First 100 Days”
Fed Funds Rate
The market has been pushing up the number of anticipated cuts to the Fed Funds rate.
• This contradicts a more “wait and see” approach in recent commentary.
• Oil has been weak amid OPEC+ supply increase, which at times can lead bond yields.
Sources: BTC Capital Management, Bloomberg
Municipal Bonds
• Municipal bonds have seen their relative value improve dramatically in April.
• The spread widening occurred relatively uniformly across credit qualities.
• Spreads could tighten into the third quarter when annual new issue supply dries up.
Sources: BTC Capital Management, Bloomberg
Manufacturing Slides, While Services Rebounds in April
• The latest metrics of economic activity in the U.S. for April show the Services segment of the economy rebounding to some
degree, while Manufacturing activity continues to slump.
• Note, any reading above 50 (the white line) indicates economic expansion, while any reading below 50 indicates economic
contraction.
• The current White House administration has focused on reviving the Manufacturing segment of the economy (which constitutes
approximately a third of the overall economy). Manufacturing has remained in contraction territory for the last several years.
Sources: BTC Capital Management, Bloomberg
Two “Essential” Sectors, Two Different Results
• Both the Consumer Staples sector and Health Care sector contain companies that many would argue are “essential” (albeit in
different aspects) to the consumer. However, since 2024, these two sectors have performed very differently.
• Companies such as Walmart, Costco, and Colgate Palmolive have seen significant returns over the last 16 months, while
companies in the Health Care sector have been negatively affected by changes in government programs and other macro factors.
• The Health Care sector is forecasted to lead earnings growth in calendar year 2025 versus other sectors. However, it currently
trades at a discount to the broad market and to the Consumer Staples sector.
Sources: BTC Capital Management, FactSet
Stock Market Performance Over “The First 100 Days”
• The chart above shows the percent change in the S&P 500 over each president’s first 100 days.
• President Trump initiated his reciprocal tariff program April 2, 2025, after which market volatility surged in response and called
into question investor “trust” in U.S. assets.
• Year-to-date through March 31, 2025, the S&P 500 declined 4.3%, while investment-grade bonds rose 2.8%.
• After the announcement, the S&P 500 fell 12.1% between April 2 and April 8, while investment-grade bonds declined 1.2%.
• Since the recent market low of April 8, the Trump administration has been more constructive regarding the application of
tariffs to which the market responded as the S&P 500 climbed 11.8% from its recent low through the end of April while
Source: LSEG Datastream
Important Disclosures
Sources: BTC Capital Management, Bloomberg, FactSet, LSEG Datastream
The information provided has been obtained from sources deemed reliable, but BTC Capital Management and its affiliates cannot guarantee accuracy. Past performance is not a guarantee of future returns. Performance over periods exceeding 12 months has been annualized.
This document is intended for informational purposes only and is not an offer or solicitation with respect to the purchase or sale of any security. Statements in this report are based on the views of BTC Capital Management and on information available at the time this report was prepared. Rates are subject to change based on market and/or other conditions without notice. This commentary contains no investment recommendations, and you should not interpret any statement in this report as investment, tax, legal, and/or financial planning advice. All investments involve risk, including the possible loss of principal. Investments are not FDIC insured and may lose value.