Cautious Optimism

Markets Are Relatively Calm—Maintain Cautious Optimism

Markets have remained surprisingly stable over the past month, but beneath the surface, key macro signals are shifting.

First, the U.S. and China agreed to a 90-day tariff pause, easing trade tensions and offering a brief reprieve for global supply chains. While this may reduce near-term inflation pressure, it's not a resolution. Supply chains remain fragile, and any reversal could hit GDP this summer just as inventories begin to tighten.

Shortly after the pause the U.S. received another development: Moody’s downgraded the U.S. credit rating from Aaa to Aa1, removing the country’s last perfect rating among the big three agencies. While largely symbolic, the message is clear—persistent deficits, rising interest costs, and political dysfunction are eroding confidence in U.S. fiscal health.

And…the bond market agrees. 30-year Treasury yields surged to 5% briefly, pushing borrowing costs to levels not seen since 2007. Remember, with over $36 trillion in debt, each 1% rise in rates adds hundreds of billions in annual interest expense—a growing drag on the federal budget.

At Iron Valley Investments, We’re Focused On:

Tariff Reprieve & Supply Chain Risk

• Shipping remains bumpy after initial tariff distortions

• Ports are clearing backlog, but restocking will likely lag

• Policy clarity is lacking—and businesses can’t forecast for it

Credit Downgrade & Structural Fiscal Stress

• Weak demand at long-bond auctions may signal market hesitation

• Rising debt service is crowding out budget flexibility

• Watch gold, hard assets, and the dollar for shifts in confidence

These aren't panic moments—but they’re signals, and we’re watching closely. The next few months will likely dictate whether we achieve a soft or hard landing.

This newsletter is for informational and educational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. All investments involve risk, including the possible loss of principal. Past performance is not indicative of future results. Iron Valley Investments is a registered investment adviser in the State of Pennsylvania. Registration does not imply a certain level of skill or training. A copy of Iron Valley Investments current written disclosure statement discussing Iron Valley Investments business operations, services, and fees is available at the SEC’s investment adviser public information website – www.adviserinfo.sec.gov or from Iron Valley Investments upon written request.