Beyond the headlines: Navigating markets, Washington and what comes next

In an environment where economic policy uncertainty and fast-moving news headlines have driven market volatility, it’s critical for investors to stay informed.

A recent discussion with Michael Hans, Chief Investment Officer for Citizens Private Wealth, Tina Hurley, Head of Planning and UHNW Solutions for Citizens Wealth Management, and Ken Robinson, Head of Government Relations at Citizens, unpacked the forces impacting markets and where opportunities may emerge in the shifting landscape.

To help guide investment conversations with your advisor, here are some of the biggest takeaways and key points from their discussion.

Tariffs remain a major source of uncertainty

The Trump administration's tariff announcement on April 2, 2025, injected significant uncertainty into global markets. With tariff rates that were far steeper and more extensive than most experts anticipated, businesses were left scrambling to adjust supply chains and pricing strategies. Days later, on April 9, 2025, the Trump administration altered course, announcing a 90-day pause on most “reciprocal” tariffs, with the exception of China.

Over the coming months, one thing that is for certain is that more change lies ahead — including the possibility that some tariffs will be rolled back through bilateral negotiations. However, the unpredictable nature of trade policy under the Trump administration makes long-term business planning a challenge.

Investors should continue to anticipate volatility in equity, debt, and currency markets until there is greater clarity on the rollout and overall impact of the new tariff policies.

Tax reform is likely to pass, but details remain murky

Tax cuts are a top priority for Republicans in Congress, with an unofficial goal of passing legislation by the summer. However, ongoing negotiations and differing viewpoints among various GOP factions — from deficit hawks to moderates seeking to raise the cap on state and local tax (SALT) deductions — could delay a final bill until after Labor Day.

Key areas to watch include changes to the corporate tax rate, child tax credits and the estate tax exemption. While some form of tax relief appears likely, the exact contours of the legislation remain fluid.

Deregulation is anticipated, especially in banking

While tariffs and taxes grab headlines, the current administration has quietly pursued an aggressive deregulatory agenda, particularly in the financial services industry.

With key players like Treasury Secretary Scott Bessent leading the effort, banks and financial services companies can expect a more permissive regulatory environment in areas like lending and trading.

Economic fundamentals remain sound, but confidence is key

The U.S. economy came into April with positive momentum. Unemployment data remained near historic lows and inflation readings pointed to a continued downward trend. Recent retail sales figures also showed continued consumer spending.

However, soft data on sentiment, like CEO and consumer confidence survey data, have deteriorated. What remains to be seen is how this will impact drivers of economic growth, such as consumption and spending. Looking ahead, risks around growth seem to be outweighing inflation concerns.

Data around the strength of the economy and the labor market will be closely monitored by Federal Reserve Chairman Jerome Powell to determine the extent of future interest rate cuts. Current expectations are for 2 - 3 rate cuts for the remainder of 2025, but this could change based on the dynamic economic environment.

Volatility creates opportunities for diversified portfolios

While market swings can be unnerving, they also present an opportunity to rebalance portfolios. Traditional defensive equity sectors like utilities and consumer staples, as well as alternative investments, can provide stability in choppy markets.

Municipal bonds have become more attractive as well. While credit spreads have widened, it appears to be more a function of technical factors than underlying credit concerns.

Faced with volatile markets, having a well-constructed financial plan is more important than ever. The key is to stay diversified and work closely with your financial advisor to ensure your portfolio is aligned with your long-term goals.

It’s also important to maintain perspective and avoid sweeping changes to your portfolio. Historically, some of the market’s best performing days have come sandwiched between some of the market’s worst days. While making calculated, modest adjustments to your portfolio can make sense depending on your unique circumstance and goals, it’s critical to remain objective and keep your long-term strategy in focus.

Opportunities in tax planning strategies

One other potential silver lining from the recent market volatility is the ability to be more tax efficient with gifting and estate planning strategies.

With assets dislocated from recent highs, investors may have an opportunity to transfer more out of their estates on a relative basis. Working with a financial advisor to identify ideal tax-loss harvesting opportunities and optimize charitable giving can help mitigate the impact of market volatility on your overall financial picture.

Navigating the road ahead

Navigating this economic landscape requires diligence, discipline and expert guidance. While the road ahead may be uncertain, partnering with a trusted financial advisor can help you stay the course and capitalize on opportunities as they emerge.

Your Citizens Private Wealth Advisor or Relationship Manager can work with you to ensure your financial plan is calibrated for a range of scenarios and outcomes. With the right strategies and support, you can weather market volatility with greater confidence and better ensure that you stay aligned to your long-term financial goals.