You may have to fight a battle more than once to win it

Market index returns

Week to date since April 16, 2025 as of April 23, 2025

Index definitions: Global Real Estate = FTSE EPRA/NAREIT Developed Index; Global Infrastructure = Dow Jones Brookfield Global Infrastructure Index; Natural Resource Equities = S&P Global Natural Resources Index; Commodity Futures = Bloomberg Commodity Index; TIPS = Barclays US TIPS Index; Global Equities = MSCI World Index; Real Assets Index = 30% FTSE EPRA/NAREIT Developed Index, 30% Dow Jones Brookfield Global Infrastructure Index; 15% S&P Global Natural Resources Index; 15% Bloomberg Commodity Index, 10% Barclays TIPS Index. Source: Bloomberg, DWS. Past performance is not indicative of future results. It is not possible to invest directly in an index.

To the point of Margaret Thatcher’s quote above, President Trump likely faces a long campaign of battles to declare an economic victory. Markets continued their bumpy recovery after touching year-to-date lows on April 8th. Following the tariff pause, markets responded favorably to President Trump’s toning down talk about firing Fed Chair Powell and potentially dialing down the tariff heat on China. To wit Polymarket odds of Trump removing Jerome Powell fell from 23% to 13% over the last week. Nonetheless, the sentiment damage to the animal spirits was done and the word “uncertainty” dominated corporate earnings calls. The International Monetary Fund (IMF) downgraded its growth forecasts for the global economy and warned of potential future damage from the tariff fight. The IMF’s new projection for 2024 economic growth is 2.8%, down from January’s estimate of 3.3%. Next year’s estimate is down 0.3% to 3.0%. If 2025’s estimate of 2.8% growth materializes, that would be the second worst expansion since 2009, and the slowest since Covid-19’s induced weakness of 2020. The European Central Bank cut its main financing rate by 25 basis points (bps) at its last meeting, bringing the benchmark rate to 1.25%. Comments from bank officials highlighted risks to the economy and the potential for disinflation from tariffs.^[1]

Global Equities outperformed the Real Asset Index as consumer discretionary, communications, and financial sectors outperformed the broader market. Global Real Estate Securities and Natural Resource Equities outperformed the Real Asset Index in the period. Global Infrastructure and U.S. TIPS (inflation-protected securities) lagged the market, despite providing positive returns. Commodity Futures was the only segment to post negative performance in the period as the Energy, Precious Metals, and Agriculture segments landed in negative territory. Looking at other metrics we track, the VIX, an index that measures the expected volatility of U.S. stocks, ended the period at 28.5, down 13% from the prior week, settling down 46% from its peak of 52 on April 8th. Credit spreads tightened during the period, with investment grade spreads falling 2 basis points (bps) and high yield spreads falling 10 bps. The U.S. dollar strengthened 0.5%, as measured by the DXY Index, and oil prices rose almost $2 to $62.3. The inflation breakeven curve steepened as the 5-year fell 5 bps to 2.35% and the 10-year rose 9 bps to 2.30%. Gold prices took a break from climbing even higher as they fell 1.6% to $3,288/ounce.^[1]

Why it matters: We continue to monitor economic data, as well as sentiment indicators, as they could eventually feed through to the hard data. Capital markets and corporate leaders have clearly voiced their displeasure about uncertainty and the possibility for a protracted trade battle and the damaging effect that these could have on the economy.

• Fed Survey Data Watch: The regional Federal Reserve branches recently released monthly economic survey data. The Philadelphia Fed Business Outlook Index for April fell to -26.4, down from the prior reading of 12.5, and well below expectations of 2.2. The Richmond Fed surveys of Business Conditions and the Manufacturing Index also showed weakness in April as they fell to -13 and -30, respectively. The Chicago Fed National Activity Index registered at -0.03, down from the prior revised reading of 0.24. The Kansas City Fed Manufacturing Activity index landed at -4, down from the prior reading of -2.^[1]
• Leading Indicators: S&P Global U.S. Composite PMI preliminary data for April came in at 51.2, down from 53.5 in the prior month. One positive was the manufacturing component rising to 50.7, up from 50.2. The Services PMI index fell to 51.4, down from 54.4. The European Union Composite PMI data also picked up, rising to 50.9 in March, with expansion from services (up to 51.0), as well as manufacturing (up to 48.6).^[1]
• German Growth:  This week, the departing German Minister for Economic Affairs and Climate Action, Robert Habeck, presented the new 2025 economic forecast, which forecast a stagnant economy for 2025. This view aligns with the updated IMF growth forecasts. The country is expected to face headwinds from the increasing global economic uncertainty driven by U.S. tariffs. Germany, an export-oriented nation, could be highly affected by U.S. trade policy, exacerbating existing issues like shrinking foreign demand and lagging international competitiveness. Against this backdrop, private investment activity is expected to remain restrained in the short term, but likely to accelerate towards the end of this year. Private consumption is likely to increase earlier, given easing domestic circumstances and higher real wages. The sizable financial packages for defense and infrastructure should have a positive impact on the economy from 2026 onwards, leading to a forecasted growth of 1.0%. However, to realize the full benefits of those fiscal plans, the new coalition government needs to enact structural reforms to position Germany for the future.^[2]

Real Assets, Real Insights: This week we will look at industrial earnings, regulatory risk for the wind generation sector in the U.S., and Barrick Gold’s reallocation plan.

• Industrious Industrials (Real Estate): Despite worries about the potential impact of the trade conflict and economic slowdown, the first quarter earnings reports for the Industrial sector did not show any major changes to guidance. The first quarter results were mostly in line with expectations and investor concerns about deterioration did not materialize in the numbers. Guidance holding steady in aggregate was mostly a result of conservative guidance in the previous quarter, but comments regarding tenant demand still reflected a positive tone. Since the early April tariff announcements, leases are still being completed, but activity has slowed.^[3]
• Taking the Wind Out of the Sails (Infrastructure): The  U.S. government has escalated the regulatory risk for offshore wind projects in the U.S. The administration recently issued a stop work order on the Empire wind project, pending further review. The move follows a stop in permitting for wind projects in the U.S. as the administration stifles the industry. The 810MW empire project, located in New York, is estimated to cost US$5bn, with a book value of $2.5bn, and $3bn in project financing, and delays will further increase costs, if construction even restarts.^[1]
• Cash for Gold (Commodities): Barrick Gold Corp. is trimming its portfolio of smaller mines to focus on larger-producing mines and to redeploy assets to increase its presence in copper production. The company has even floated the idea of changing its name to Barrick Mining to reflect its more diversified approach. The company is trying to take advantage of record high gold prices to exit smaller, older assets, which offer lower and/or declining output, and are a drain on management’s resources.^[1]