Bob Graham – Riggs Asset Management Company

Hi, this is Bob Graham with Riggs Asset Management Company.

Today I want to provide a follow-up to the series of conversations we’ve been having about what’s happening in the markets, what’s happening in the economy, and how those developments are affecting our portfolios.

Let me start with the punchline.

Across the board — whether you look at fixed income investments or equities — portfolios at Riggs Asset Management are doing very well.

Now let’s talk a little bit about the economy and the markets.

Over the last month and a half to two months, we’ve gone through what I would describe as a drama-driven market environment. There has been a lot of volatility and plenty of headlines.

But when we step back and look at where we are today, we’re actually very close to where we started at the beginning of the year.

At the start of the year, the expectation was that the U.S. economy would grow at roughly 2% to 2.5%.

If you look at the most recent economic data — including forecasts such as GDPNow from the Atlanta Federal Reserve and other economic growth indicators — they are all still pointing to growth around 2.5%.

So from an economic standpoint, things look fairly similar to where we began the year.

Let’s talk about the bond market.

Interest rates appear to be relatively stable. There’s a possibility they could move slightly lower toward the end of the year, but overall the bond market is currently suggesting a fairly steady environment.

To put that into perspective, the U.S. 10-year Treasury yield was 4.52% on the first trading day of the year.

Today, that yield is approximately 4.48%.

So despite all the headlines and volatility over the past several months, the difference is only about four one-hundredths of a percent. In other words, the bond market today is almost exactly where it started the year.

We’ve also talked previously about the VIX, often referred to as the fear index.

The VIX did spike earlier this year during the initial discussions surrounding tariffs and what was referred to as “Liberation Day.”

However, that volatility has now settled down.

Over the last few weeks, the VIX has been trading in roughly the 18 to 19 range.

As we’ve discussed before:

• Below 18 generally represents lower-than-normal volatility

• 19 to about 28 represents moderate volatility

• Above 28 signals high volatility

Right now we are sitting right on the line between moderate and lower volatility, and we’ve been there for several weeks.

If we look at the stock market, as measured by the S&P 500, the index is currently about 3.5% below its all-time high earlier this year.

At the same time, the market is roughly 12–16% above the lows we saw in April.

So overall we’ve had a pretty solid start to the year — despite the sharp pullback that occurred earlier.

When we step back and look at the broader picture today:

• Economic growth appears steady around 2–2.5%

• The bond market has stabilized near where it began the year

• Stock market volatility has moved back toward normal levels

In other words, despite all the noise in the headlines, when you actually look at the numbers inside the markets and the economy, we’re operating in a fairly normalized environment.

So where do we think things go from here?

Our view remains largely the same as we’ve discussed previously.

We believe the market may continue moving in a “two steps forward, one step back” pattern.

That’s exactly what we’ve seen since the April market lows, and we expect that pattern may continue through the summer months.

It’s also not uncommon to see a market pullback in the fall, so that’s something we’ll continue watching closely.

But as of right now:

• The economy appears to be in good shape

• The bond market has stabilized

• The stock market environment looks constructive

While the headlines may appear dramatic at times, the underlying data suggests a steady and fairly balanced environment.

At the moment, we don’t see anything that would likely push the markets dramatically in one direction or the other in the near term. Instead, we believe the most likely path is a gradual grind higher — two steps forward, one step back.

That’s how we’re viewing the markets, and it’s how we are currently positioned in our portfolios.

As I mentioned earlier, both the equity and fixed-income sides of our portfolios have performed very well, in part because we made tactical adjustments during periods of higher volatility, which allowed us to take advantage of the opportunities those markets created.

I hope you found this update helpful.

If you have any questions whatsoever, please reach out to your Riggs team. We’re always here to help in any way we can.

Thank you, and I look forward to speaking with you again soon.