April 2025 Commentary
Market Overview
April was marked by turmoil across global markets as “Liberation Day” came, and the U.S. imposed a minimum 10% tariff across all countries. The S&P 500® went into correction territory and lost 10.53% in two days, recovering later in the month to close April at 5,569.06, a -0.76% loss. The 10-Year U.S. Treasury yield jumped to 4.48% before settling down to 4.17% at the end of the month. Reinforcing the market volatility was the 0.3% decrease of the U.S. GDP for Q1 2025 due to the increase in imports ahead of the tariffs going into effect and the decrease in government spending. While the U.S. economy added 177,000 jobs in April, the unemployment rate remained at 4.2%. Across the globe, countries responded to U.S. protectionism by refocusing on their domestic economies. The European Central Bank cut rates by 25 bps, bringing the benchmark rate to 2.25%. In the process, the EU declared its readiness to both start negotiations and protect the growth of the eurozone economy from further tariff impacts by applying reciprocal tariffs.
In Latin America, Mexico’s GDP growth was slashed to 0.5% while Brazil’s was revised down to 2.0% due to persistent inflation and a slowdown in global growth. The HSBC India Manufacturing PMI went up to 58.2, influenced by a sharp rise in new businesses and the movement of manufacturing from China to India. The S&P Global ASEAN Manufacturing PMI slipped below 50 to 48.7, signaling a deterioration in operating conditions and reduced purchasing activity.
April proved to be a tumultuous month for emerging markets, characterized by fluctuating tariffs and market instability. The Overall benchmark saw a decline of 0.08%, heavily influenced by the Corporate HY index, which recorded the worst performance among tracked indices at -1.10%. The sell-off in high yield corporate bonds had a cascading effect, leading to negative results in the Overall HY category, which posted a decline of 0.36%, alongside Corporates at -0.33%. However, within the high yield space, Sovg & Sub-Sovg HY managed to post a modest gain of 0.31%. In contrast, investment grade securities demonstrated a stronger performance, driven by the market’s flight to safety. The Sovg & Sub-Sovg IG rose to 0.09%, 7 bps lower than its benchmark. The Liquid Sovg & Sub-Sovg outperformed its benchmark by 1 bp (please refer to the Appendix at the end of this document for the abbreviated index names).
The overarching theme for April was one of uncertainty and mixed results. Yields among the top 10 emerging market economies generally trended upward, with South Korea being the exception, as it experienced a drop of 4 bps, bringing the overall yield for the country’s bonds to 4.69%. Turkey saw the highest yield increase, up 23 bps, followed closely by Mexico, which rose by 22 bps compared to the previous month. Returns in April were subdued, with South Korea gaining 0.49%, followed by Indonesia at 0.44% and China at 0.24%. Year-to-date, Saudi Arabia led the pack with a return of 2.90%.
