Aspen Wealth Management, Inc.

9300 W. 110th Street, Suite 680

Overland Park, KS  66210

913.491.0500

www.aspenwealth.com

Market Update
(all values as of 10.31.2025)

Stock Indices:

Dow Jones 47,562
S&P 500 6,840
Nasdaq 23,724

Bond Sector Yields:

2 Yr Treasury 3.60%
10 Yr Treasury 4.11%
10 Yr Municipal 2.73%
High Yield 6.53%

YTD Market Returns:

Dow Jones 11.80%
S&P 500 16.30%
Nasdaq 22.86%
MSCI-EAFE 23.69%
MSCI-Europe 25.44%
MSCI-Pacific 25.83%
MSCI-Emg Mkt 30.32%
 
US Agg Bond 6.80%
US Corp Bond 7.29%
US Gov’t Bond 6.51%

Commodity Prices:

Gold 4,013
Silver 48.25
Oil (WTI) 60.88

Currencies:

Dollar / Euro 1.15
Dollar / Pound 1.31
Yen / Dollar 153.64
Canadian /Dollar 0.71

Macro Overview

A stronger than anticipated March jobs report and higher reported inflation has reduced the chances of a Fed rate cut in June.  Strong labor dynamics tend to foster underlying inflation for longer periods of time, thus influencing the Fed’s decision on rate decreases. Yields on shorter term U.S. Treasury bonds rose in March as expectations for a spring or summer Fed rate cut dissipated.

At the start of 2024, six Federal Reserve rate cuts were expected in 2024 with the first cut to be in March.  The March rate cut didn’t materialize as employment remains strong and inflation remains higher than anticipated.  Currently, the Federal Reserve is signaling rate cuts in 2024 with some Fed officials expecting at least three rate reductions in 2024.

The government reported March Consumer Price Index, a measure of inflation, rose 3.5% over last year.  Alternatively, a private firm, Truflation, is reporting inflation year-over-year to be only 1.78%.  Truflation tracks inflation with over 6 million data points.  Back in 2021-2, Truflation identified the inflationary pressures prior to the government reported data.  Since 2023, as inflation has eased, Truflation continues to report lower inflation than the US government.

A number of central banks worldwide are expected to cut rates starting this summer.  Slower economic growth and lessening inflationary pressures are prompting lower rates throughout Europe in order to sustain economic momentum. The European Central Bank, the central banks of England, Canada, Australia, New Zealand, and Switzerland are all anticipated to begin lowering rates this summer and through the end of the year. 

The Baltimore bridge collapse highlights the fragility of the nation’s infrastructure and the need for proactive contingency planning and maintaining diversified routing options. A critical component of the nation’s shipping transit, the Baltimore Port is the largest U.S. port by volume in handling farm, construction machinery, and agricultural products. It is also the busiest U.S. port for automobile shipments, moving more than 750,000 vehicles in 2023, according to data from the Maryland Port Administration.

Florida passed a law this past month that prohibits minors under the age of 14 from having social-media accounts, regardless of parental consent. The legislation is aimed at curbing social-media access for minors and requires social-media platforms to cancel accounts and delete all content on the request of parents and minors. The law is set to become effective and enforceable on January 1, 2025.

Shrinkflation, a term being used more frequently by the White House and in the press, is when companies sell a smaller or lesser amount of a product, but for the same price. The dynamic has become common from food products to cars, where consumers are getting less yet still spending the same. Higher production costs, including raw materials and labor, have forced companies to either raise prices or shrink product portions in order to maintain profitable margins.

Sources: Maryland Port Administration, ECB, Federal Reserve, Labor Dept., EuroStat, U.S. Treasury

 

Equities Continue Their Advance – Domestic Equity Markets

Global equity markets rose across the board in the 1st Quarter. The laggard was Emerging Markets due to the strong US dollar.  Many analysts believe that the current equity market is being driven by price momentum rather than earnings expansion. This is a scenario where rising equity prices fuel additional buying even though earnings may not substantiate it.

The energy and utility sectors increased the most in March as fuel, natural gas, and electrical costs rose. Technology, real estate and consumer discretionary were sectors that underperformed in March, indicative of a reversal from prior performances this year.

Major international and domestic equity indices are positive for the year thorough the end of March, lifting the value of equities globally. A strong dollar has also contributed to market dynamics as U.S. exports have become more expensive for consumers in other countries.

Sources: Dow Jones, S&P, Bloomberg

 

Rates Remain Stubborn – Fixed Income Overview

Inflationary pressures and better than expected employment data, pushed interest rates slightly higher in March causing the Federal Reserve to hold off on its rate reduction strategy. Do you want to know when and how interest rates will be cut by the Federal Reserve?  Watch the 2-year US Treasury yield.   In October 2023, the 2-year yield peaked at 5.19% nearly the same as the current Federal Funds rate of 5.25 – 5.5%.  Subsequently, the 2-year UST yield fell to 4.14% in January 2024.  This is when the markets expected six rate cuts in 2024.  Since January, the 2-year yield has risen to 4.90% in April, almost 1/2% lower than the Fed Funds rate.  Since the 2-year yield is less than the Fed Funds rate, interest rate cuts are still expected in 2024.  If the Truflation inflation rate is accurate, the Federal Reserve will be late to cut interest rates.  Leaving interest rates higher for longer than necessary, increases the chances and severity of a recession.

Rates on the average 30-year conforming mortgage ended March at 6.79%, while the average rate on a new auto loan settled at 8.57% for a four-year term. Historically, consumer loan interest rates decline as the Fed initiates a rate reduction strategy.

Sources: Federal Reserve Bank of St. Louis, Treasury Dept., FreddieMac

 

Strong U.S Dollar Prompts Americans To Travel Overseas – Foreign Exchange Update

Pent up demand post-Covid and a strong U.S. dollar is becoming a decisive factor for U.S. travelers heading overseas. Up nearly 3.5% year to date, the surging U.S. dollar is expected to maintain its value as demand for the greenback remains enduring. When traveling to other countries, an elevated U.S. dollar versus other country currencies, can make a European trip that much less costly. As of the end of March, the Euro is down nearly 8% versus the U.S. dollar, making travel to any Euro denominated country cheaper than the summer of 2021.

Here at home, the strengthening dollar has also made imported goods into the United States more affordable, which become less expensive for American consumers as the dollar rises. These lower import prices help mitigate inflation in the U.S. allowing consumers to spend less on certain goods yet spend more on leisure and travel. (Sources: https://fred.stlouisfed.org/, Bloomberg, Commerce Department)

 

Average Tax Refund For 2024 Tax Season Larger Than Last Year – Tax Policy Update

The 2023 tax season, which began January 23, 2024, has so far seen over 90 million federal tax returns filed as of the end of March. The IRS tracks and monitors the number and status of returns in order to estimate tax revenue and filing timeliness. Refunds are also tracked, projecting the amount of funds owed to taxpayers. Through the end of March, there had been over 60 million refunds issued to taxpayers, with an average refund in the amount of $3,050. IRS data also reveals that the average refund so far this year is roughly 5% larger than it was for tax year 2022.

In tax year 2022, the Federal Government collected more than $4.9 trillion in total receipts, processed over 262 million returns and issued more than $641 billion in tax refunds. Budget estimates from the Federal Government, project an estimated $4.8 trillion in total receipts for tax year 2023.

Sources: IRS, CBO, Whitehouse.gov

 

 

 

Chocolate Is Getting Expensive – Commodity Overview

Weather and crop disease in geographic regions where cocoa beans grow, have hindered crops and stricken supply leading to elevated chocolate prices. Cocoa beans surpassed $9,000 per metric ton in March, the first time ever, with cocoa bean prices more than doubling from the beginning of the year.

West Africa, where most of the world’s cocoa beans are grown, has been hit with poor weather and crop disease, dramatically curtailing cocoa bean production, which affects the production of chocolate globally. The limited production is expected to linger for some time, directly affecting the price of chocolate and its production. Higher sugar prices have also been a challenge for chocolate producers, who use the sweetener as an essential ingredient when making chocolate confections.

Sources: Federal Reserve Bank of St. Louis

 

 

Some States Continue To Lose Workers After Pandemic – Labor Market Dynamics

The pandemic brought on dramatic and instrumental changes to employment and the labor markets, some of which may be substantially lasting. Work at home positions have become widely accepted and commonplace now, as have transient workers migrating from city to city, and state to state. Many companies today allow their employees to essentially work from anywhere, any city, any state, establishing a true virtual work environment.

Nearly four years after the pandemic, migration from various states has been consistent. California and New York combined, lost over half a million workers to other states from 2020 to 2024, while Texas took in one million new workers during the same period. Florida also saw a dramatic increase with over 750,000 new workers flooding into the state. Cost of living, taxes, and housing are among some of the reasons for the migrations.  As a result of the worker migrations, California has seen its unemployment rate rise to 5.3%, the highest in the nation, while New Jersey saw its unemployment rate hit 4.8%.  (Sources: Department of Labor)

Why Gasoline Prices Are Rising Faster Than Usual – Energy Overview

Various factors are contributing to sustained high gas prices, which are expected to add to price pressures heading into the summer months. Traditionally, gasoline prices move higher as vacation travelers hit the road during the summer months. Transportation companies, railroads, and airlines also see enhanced activity during the summer season.  This summer, however, may produce higher prices than usual, as continued supply constraints, shipping issues, and increased international demand for U.S. oil and gasoline driven by the Russian invasion of Ukraine the Middle East conflict. The EIA reported that the average price of a gallon of regular gasoline rose to over $3.50 per gallon in March nationally.  Rising gasoline prices can become a burden for both consumers and companies. Not only are consumers spending more of their income on fuel, companies also pass along the higher costs of fuel to consumers. Higher fuel prices tend to filter down to the consumer since the cost of food, transportation, and travel are all affected by rising fuel expenses. Historically, rising fuel prices eventually hinder economic growth, thus slowing industrial and consumer activity and lessening demand for fuel.  Many economists believe that a recession would also curtail demand for fuel, thus bringing fuel prices lower. (Sources: U.S. Energy Information Administration (EIA)

Market Returns: All data is indicative of total return which includes capital gain/loss and reinvested dividends for noted period. Index data sources; MSCI, DJ-UBSCI, WTI, IDC, S&P. The information provided is believed to be reliable, but its accuracy or completeness is not warranted. This material is not intended as an offer or solicitation for the purchase or sale of any stock, bond, mutual fund, or any other financial instrument. The views and strategies discussed herein may not be appropriate and/or suitable for all investors. This material is meant solely for informational purposes, and is not intended to suffice as any type of accounting, legal, tax, or estate planning advice. Any and all forecasts mentioned are for illustrative purposes only and should not be interpreted as investment recommendations.