
How April 2025 Redefined Portfolio Risk
April 2025 emerged as a pivotal moment for financial markets, fundamentally reshaping how investors perceive and manage portfolio risk. Marked by unprecedented policy shifts, soaring volatility, and a rare synchronized plunge in stocks and bonds, the month rivaled the chaos of the 2008 Global Financial Crisis and the 2020 COVID-19 crash.
From a historic VIX spike to gold's unexpected resilience, these events exposed vulnerabilities in traditional diversification strategies and hinted at a potential secular shift in global markets. Here's a detailed look at what unfolded, why it mattered, and how it redefined risk for investors moving forward.
The turmoil began on April 2, 2025, dubbed 'Liberation Day,' when President Donald Trump unveiled an ambitious tariff plan with rates as high as 125% on imports from countries like China, as reported by The Associated Press. The proposal, one of the most aggressive trade policies since the Smoot-Hawley Tariff Act of 1930, promised to reshape global trade dynamics.
Volatility surged as Wall Street's 'fear index,' the VIX, soared to levels unseen since the 2008 crisis and 2020 pandemic crash, according to Investopedia, peaking on April 8, 2025. The S&P 500 plummeted 18.9% from its February 2025 high by April 8, while the tech-heavy Nasdaq entered bear market territory, dropping 26.7% from its December 2024 peak by April 7. This rare breakdown in the negative correlation between equities and fixed income upended the risk-mitigation assumptions of diversified portfolios, leaving investors exposed to unprecedented losses.
Compounding the challenge, bonds—typically a safe haven during equity market turmoil—failed to provide relief. The aggressive tariff plan fueled fears of inflation and reduced global demand for U.S. Treasuries, as foreign investors anticipated trade disruptions and higher borrowing costs. This drove yields on the 10-year Treasury note from 4.01% on April 4 to 4.48% by April 11, causing bond prices to plummet and eroding their role as a hedge, before yields settled at 4.23% by April 28.
Why did bonds falter? Foreign governments and central banks, wary of U.S. economic nationalism, appeared to reassess their reliance on U.S. Treasuries. While foreign holdings of U.S. debt rose from $8.527 trillion in January 2025 to $8.817 trillion in February, according to U.S. Treasury Department data, some countries, like China and Russia, accelerated diversification into assets like gold, signaling caution.
Amid the chaos, gold shone as a bright spot. Rallying since November 2024, the precious metal peaked at just over $3,500 on April 22. Driven by demand from institutional investors and central banks, gold's rally underscored its value as a non-correlated asset that thrives amid geopolitical and economic uncertainty. For portfolios battered by stock and bond losses, gold offered a critical hedge, highlighting its growing relevance in risk-conscious strategies.
The events of April 2025 raise profound questions about the U.S. economy and its role in global markets. The synchronized decline in stocks and bonds has challenged the traditional 60/40 portfolio, forcing investors to rethink diversification. The possibility of reduced global reliance on U.S. assets, evidenced by central bank gold purchases, introduces risks to the dollar's status as the world's reserve currency.
As markets head into the typically quieter summer months, uncertainty persists, with tariff implementation details, retaliatory trade measures, and Federal Reserve policy decisions poised to drive volatility. To navigate this new risk environment, investors should consider reallocating to assets less tied to U.S. markets, such as gold for its stability, commodities for inflation protection, or select emerging market equities in countries less exposed to tariff fallout. Hedging currency risk and prioritizing liquidity will also be key as global trade dynamics evolve.
April 2025 will stand as a defining chapter in financial history, not only for its market turmoil but for its profound impact on portfolio risk management. The synchronized collapse of stocks and bonds, coupled with gold's rise and questions about the dollar's dominance, has upended conventional investment wisdom.
As uncertainties linger—driven by trade policies, central bank maneuvers, and geopolitical shifts—investors must adapt to a new risk landscape. Diversifying into assets like gold, commodities, or select emerging markets, while closely tracking global developments, will be critical. Whether April's upheaval marks the dawn of a broader secular shift remains uncertain, but it has undeniably redefined how investors approach risk in an unpredictable world.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Business Upturn
5 minutes ago
- Business Upturn
Online Tax Firm MyExpatTaxes Alerts Expats: Final Chance to Claim 2021 Stimulus Payments
Vienna, June 10, 2025 (GLOBE NEWSWIRE) — MyExpatTaxes, a leading US expat tax company known for its support of U.S. citizens living overseas, is highlighting an important upcoming deadline for American expatriates. By June 16th, expats must act to claim the 2021 stimulus payments. This deadline represents the final opportunity for expats who haven't already to benefit from COVID-19 economic stimulus payments, which can total thousands of . MyExpatTaxes is urging individuals not to miss out on this opportunity. As the U.S. is one of just two countries that taxes based on citizenship rather than residence, Americans living abroad have to report their worldwide income by filing a U.S. tax return every year. Many Americans expats are unaware of this requirement to file from overseas though, so get behind in their filing. The IRS has an amnesty program for these expats though called the Offshire Streamlined Filing Compliance Procedures. This process offers a chance for overseas Americans who have unintentionally failed to meet their filing obligations to catch up on their U.S. tax filing without facing penalties. It requires submitting the last three years of tax returns and, where applicable, up to six years of Foreign Bank and Financial Accounts Reports (FBARs). The procedure can seem complex, but with MyExpatTaxes offering either self-service or guided assistance, expats can find a sense of relief with easy access to tools like a US expat tax calculator and a stimulus check calculator found on their website. Nathalie Goldstein, CEO of MyExpatTaxes, underscores the significance of acting before the June 16th deadline for non-compliance overseas Americans, saying, 'The June 16th 2025 deadline is the last opportunity for American expatriates who may not have been aware that they have to file U.S. taxes from abroad to claim teh COVID-19 stimulus payments. It's also a valuable opportunity to get tax compliant without facing penalties. Our goal is to provide them with the guidance they need to make the most of these benefits.' Her words reflect the broader mission of MyExpatTaxes – supporting American expats in navigating what can often be a daunting process filing from overseas (often as well as filing taxes in the country where they reside). The 2021 expanded Child Tax Credit is also available for American families living abroad. This credit offers a substantial benefit of up to $3,600 per child, refundable for qualifying families. Timely filing is critical to claim this credit, ensuring families don't inadvertently miss out. To aid in this, expats can access comprehensive guidance and information on the Streamlined Procedures through MyExpatTaxes' dedicated page: Adding to the firm's efforts, Goldstein remarks, 'The potential gains for catching up and filing for 2021 for expats who qualify for the stimulus payments are typically far outweigh the costs of becoming compliant. Our platform is designed to simplify the tax filing process for U.S. citizens abroad, offering practical solutions and expert support. With the deadline imminent to claim these valuable payments, we're dedicated to helping expatriates claim what they are rightfully owed.' This statement emphasizes MyExpatTaxes' commitment to easing the stress associated with U.S. tax filing for expats. To further assist expats, the company has developed easy-to-use resources such as tax guides, quick start checklists, and webinars available on their website. These resources provide education and support, aimed at simplifying and demystifying the intricacies of international tax reporting for Americans living abroad. User testimonials and official reviews highlight the effectiveness and reliability of MyExpatTaxes' services, reinforcing their reputation as a helpful aid for expats. As the June 16th deadline approaches, expats need to be vigilant. Missing this date means losing out on the chance to claim the stimulus payments for good. Through proactive action and using MyExpatTaxes' offerings, expatriates can not only ensure compliance but also capitalize on available benefits. MyExpatTaxes remains committed to guiding expatriates through these important periods, helping them understand and fulfill their tax responsibilities while maximizing their eligible claims. For those seeking to learn more or benefit from these services, they can learn more through the platform's site: The resources provided are not just about fulfilling obligations – they also empower expats to take control of their financial responsibilities with confidence. ### For more information about MyExpatTaxes, contact the company here: MyExpatTaxesMackenzie Passegger [email protected]


CNBC
7 minutes ago
- CNBC
Treasury yields slip as U.S.-China trade talks enter Day 2
Treasury yields slipped Tuesday as U.S. and Chinese officials resumed trade negotiations in London for the second day. The 10-year Treasury yield was down almost 3 basis points to 4.456% at 3.30 a.m. ET. The 2-year yield slipped around one basis point to 3.993%. The 30-year yield was lower by 3 basis points to 4.921%. One basis point equals 0.01%. Yields and prices move inversely in the bond market. U.S.-China trade negotiations in London resumed on Tuesday, building on a recent call between U.S. President Donald Trump and Chinese counterpart Xi Jinping. On Monday, Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer had talks with Chinese officials. Both sides have intensified diplomatic efforts following weeks of escalating trade tensions and uncertainty sparked by Trump's broad import tariffs on China and other key trading partners in April. "While we await any concrete news, it's worth remembering that markets have been used to a lot of back-and-forth in recent weeks," Deutsche Bank's analysts said, in reference to how U.S. tariffs slapped on China went all the way up to 145%, before being slashed to 30%, among other instances of policy reversals. "There've been several twists and turns already, and markets are getting fairly used to this uncertainty by now," wrote in a note published Tuesday. Deflation in China is also putting pressure on the Chinese government to negotiate a trade deal with Trump that benefits both countries, said Ed Yardeni, president of Yardeni Research. China's consumer prices fell for a fourth consecutive month in May, with the CPI falling 0.1% from a year earlier, data from the National Bureau of Statistics showed on Monday.


CNBC
8 minutes ago
- CNBC
'Collateral damage': Fund managers lobby Congress over Section 899 to avert foreign investors leaving the U.S.
American fund managers are lobbying Congress over a provision tucked inside President Donald Trump's tax bill that they say could lead to foreign investors "quickly" pulling investments out of the U.S. The "One Big Beautiful Bill Act," which passed through the U.S. House of Representatives in May, aims to penalize foreign-owned firms operating in the U.S. and that are from countries with "unfair foreign taxes" under a provision known as Section 899. It is currently being considered by the Senate. The Investment Company Institute (ICI), which represents fund houses in the U.S., is lobbying Congress for an amendment as it warns the bill in its current form also impacts most foreign investments in U.S. stock markets, according to documents seen by CNBC. "In order to avoid the impact of section 899, portfolio investors are likely to retreat quickly from US equities, leading to capital outflows from the United States," the ICI said in a letter sent to Senator Mike Crapo, the chairman of the Senate Finance Committee, on June 5. "If sustained selling by foreign investors depresses US equity markets, this would harm both US companies and investors." Section 899 aims to introduce retaliatory tax measures against entities from countries that have levies such as the Digital Services Taxes and the OECD's global minimum tax rules. If signed into law, it could impact investors from the European Union, the United Kingdom, Canada, Australia, and Switzerland, among others. The tax would start at 5% and escalate by five percentage points annually to a maximum of 20%, on top of existing taxes, which vary by country and tax treaties. That could dent returns for foreign investors in U.S. equities. In the letter, the ICI also suggests that the U.S. fund management industry, which has collectively invested around $18 trillion in U.S. stock markets, would be "collateral damage" due to the impact of Section 899. "We do believe, however, that the current drafting of proposed section 899 should clarify its scope and avoid discouraging foreign investment in US equity markets through 'investment funds' such as US mutual funds and ETFs and their foreign counterparts (e.g., UCITS funds)," the ICI said. The letter to Senators goes on to say, "section 899 would penalize these funds and their shareholders by taxing passive income from US equity investments. To this end, investment funds would be collateral damage to the intended focus of section 899." Funds typically charge fees as a percentage of assets under management, and a withdrawal by foreign investors, over Section 899 concerns, could lead to lower earnings for the investment management firm. The Senate Finance Committee declined to comment, and Senator Mike Crapo's office did not respond to CNBC's request for comment. Foreign investors own $19 trillion in the U.S. stock markets, $7 trillion in U.S. government bonds, and $5 trillion in U.S. credit, according to data compiled by Apollo Global Management. The ICI said it's largely in support of the U.S. government's attempt to "protect US business interests overseas and to address discriminatory foreign taxes." However, it cautions that the current draft of the bill does the opposite. "Some foreign governments may actually cheer this capital flight from the United States because it benefits their local equity markets, which is not the behavioral incentive that Section 899 seeks to achieve," it said. Yuri Khodjamirian, chief investment officer for Tema ETFs, said investors in Europe who are focused on dividend-distributing U.S. companies would be "thinking quite carefully" about their holdings at this stage. "If suddenly you have to pay tax on that income, why would you hold that?" Khodjamirian questioned. Tema ETFs runs the American Reshoring ETF that is available to both U.S. and foreign investors. Tax experts suggest earnings paid out to foreign investors are more likely to be hit by Section 899 than capital gains and other methods of shareholder distributions. The Tema ETFs investment chief cautioned that the impact on the U.S. equities market would be relatively minimal as U.S. companies, say in the S&P 500, are typically not known for their dividends. "In the US, dividend yields are quite low. There's not a lot of companies paying. And most of the capital gets returned to share buybacks," Khodjamirian told CNBC. "Is that actually going to be that big of an issue then?"