Weekly Market Pulse - Week ending March 14, 2025

Market developments

Equities: U.S. stocks rebounded sharply on Friday but still ended the week lower, with the S&P 500 falling 2.27% and the Nasdaq down 2.43%. The Friday bounce came after markets had slipped into correction territory, with stocks dropping 10% from February's record high. Investor sentiment remained fragile amid concerns over President Donald Trump's trade policies.

Fixed Income: Treasury yields climbed throughout the week, with the benchmark 10-year yield settling at 4.31%. Despite rising yields, the U.S. Aggregate Bond index managed a 0.15% weekly gain, while European bonds declined 0.22% amid news of Germany's debt-funded spending package. U.S. high-yield bonds were hit harder, falling 0.91% for the week as investors reassessed risk exposure amid heightened market volatility and continuing concerns about the economic impact of potential tariffs.

Commodities: Oil prices snapped a seven-week losing streak with West Texas Intermediate crude posting a modest 0.13% weekly gain, settling above $67 a barrel. Gold reached a significant milestone, briefly exceeding $3,000 an ounce and ending the week up 2.55%. Copper was the standout performer in commodities, surging 3.97% for the week as industrial metals continued to show strength despite broader market uncertainty.

Performance (price return)

Source: Bloomberg, as of March 14, 2025

Central Bank Interest Rates

Source: Bloomberg, as of March 14, 2025

*Expected rates are based on bond futures pricing

Macro developments

Canada – Bank of Canada Cuts Rates Amid Economic Uncertainty

The Bank of Canada lowered its key interest rate by 25bps to 2.75%, marking a total reduction of 225bps since June 2024. While past rate cuts have supported economic growth, rising trade tensions with the U.S. could slow momentum. Consumer confidence and investment expectations are being negatively impacted by unpredictable U.S. tariff policies. Inflation is expected to rise to 2.5% due to expiring tax credits, though core inflation may slow as shelter costs stabilize.

U.S. – Job Market Sees Increased Openings, Inflation Eases More Than Expected

Job openings in the U.S. rose by 232,000 to 7.74 million in January 2025, exceeding market expectations. Gains were strongest in retail trade, finance, and healthcare, while professional and business services saw a decline. The West and Northeast led regional increases. Hires and separations also rose slightly, reflecting continued labor market activity.

Annual inflation fell to 2.8% in February from 3% in January, below expectations. Energy prices declined, with gasoline and fuel oil dropping, while natural gas costs surged. Inflation also slowed in shelter and transportation, but food prices rose slightly. Core inflation dropped to 3.1%, its lowest level since April 2021, as monthly price increases softened more than anticipated.

International – China Enters Deflation as Consumer Prices Drop, Japan’s Producer Prices Maintain Upward Momentum

China’s consumer prices fell by 0.7% year-over-year in February 2025, reversing January’s 0.5% increase. This marks the first deflation since January 2024, driven by a sharp drop in food prices, particularly fresh vegetables and pork. Non-food prices also declined, with education and transport costs falling. Core inflation turned negative, indicating weakening domestic demand.

Japan’s producer prices rose by 4.0% year-over-year in February 2025, aligning with forecasts. Costs increased across various sectors, including transport equipment, petroleum, and machinery, while prices for chemicals, iron & steel, and lumber declined. Monthly producer prices remained flat after a 0.3% rise in January, despite expectations of a slight decline.

Quick look ahead

The Asset Allocation Team at NEI Investments

Judith Chan, CFA – Vice President, Head of Multi-Asset Portfolios

Mateo Marks, CFA – Senior Multi Asset Portfolio Analyst

Adam Ludwick, CFA – Senior Multi Asset Portfolio Analyst

Anthony Rago, B.A.Sc. – Senior Multi Asset Portfolio Analyst