CIM Market Brief – March 2025
Given the substantial increase in market volatility in the past few weeks, we wanted to take a moment to provide some context and recent economic data that could be helpful as investors consider the best path forward. We firmly believe the current market environment, together with further slowing in US GDP will increasingly drive investors towards lower risk assets, until such time that there is greater clarity and certainty in terms of the outlook for growth. In volatile environments such as these, the attractive taxable equivalent return and stability that municipal bonds offer, is a compelling option for investors who are currently exposed to significantly higher drawdown potential in risk assets. The municipal bond investment solutions that Clinton Investment Management offers, given the higher tax-free cash flow and total return we have delivered over time relative the broader Zephyr municipal bond manager universe, are an excellent complement for investors seeking to lock in higher yields before rates fall further.
- Credit card delinquencies are now the highest they have been since the Great Financial Crisis.
- The average credit card interest rate is currently over 22%.
- January retail sales month-over-month -0.8%.
- Univ of Michigan Consumer Sentiment 67.8, lowest level since Nov 2023.
- Housing starts -9.8%, largest decline since March of 2024.
- Initial jobless claims +242k for the week ended Feb. 22, up from 221k the prior week.
- Jobless claims are at a three-month high.
- Government layoffs and reduction in spending expected to pressure unemployment higher over time.
- Core Personal Consumption Expenditures (PCE) 2.6% in Jan 2025, down from 2.9%.
- Services Purchasing Managers Index 49.7, measures below 50 indicate contraction, the first since Jan 2023.
- ISM Manufacturing New Orders 48.6, measures below 50 indicate contraction.
- Bonds are now outperforming stocks going back to the night of the Presidential election.
- GDPNow estimate for Q1 GDP -2.8%, a material swing from previous estimates.
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