Monthly Market Update

Consumer Healthy, Inflation Sticky

• Gross Domestic Product ⁽¹⁾⁽²⁾ (1Q25): The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is 2.9% on February 5, 2025, down from 3.9% on February 3.
• Inflation ⁽⁴⁾ (December): The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4% on a seasonally adjusted basis in December, after rising 0.3% in November, the U.S. Bureau of Labor Statistics reported. Over the last 12 months, the all-items index increased 2.9% before seasonal adjustment. The index for all-items less food and energy rose 0.2% in December, after increasing 0.3% in each of the previous 4 months. The all-items less food and energy index rose 2.9% for the 12 months ending December, after rising 2.7% over the 12 months ending November.
• The Producer Price Index (PPI) (December): The Producer Price Index for final demand rose 0.2% in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported. On an unadjusted basis, the index for final demand advanced 3.3% in 2024, after moving up 1.1% in 2023.
• Retail and Food Services Sales ⁽⁶⁾ (December): Advance estimates of U.S. retail and food services sales for December 2024, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $729.2 billion, an increase of 0.4% (±0.5%) from the previous month, and up 3.9 percent (±0.5%) from December 2023.
• Personal Income and PCE ⁽⁹⁾ (December): Personal income increased $92.0 billion (0.4% at a monthly rate) in December, according to estimates released today by the U.S. Bureau of Economic Analysis. From the preceding month, the PCE price index for December increased 0.3%. Excluding food and energy, the PCE price index increased 0.2%. From the same month one year ago, the PCE price index for December increased 2.6%. Excluding food and energy, the PCE price index increased 2.8% from one year ago.

Fed maintains Rates Steady Amidst Economic Uncertainty

The last FOMC meeting took place on January 29^th, 2025. The Committee decided to hold federal funds to the target range of 4.25% to 4.50%. As of this writing, markets are pricing an 85.5% chance of a hold at the March 19^th, 2025, with only an 14.5% chance of lowering rates by another -25 bps. ⁽⁷⁾⁽⁸⁾

Highlights of Chair Powell’s Press Conference:

• The Fed is Sitting Tight: “The economy is strong overall and has made significant progress toward our goals over the past two years. Labor market conditions have cooled from their formerly overheated state and remain solid. Inflation has moved much closer to our 2% longer-run goal, though it remains somewhat elevated. In support of our goals, today the Federal Open Market Committee decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings.”
• Uncertainty Over Tariffs: “The range of possibilities very, very wide. We don’t know what’s going to be tariffed, we don’t know for how long or how much, what countries, we don’t know about retaliation, we don’t know how it’s going to transmit through the economy to consumers. That’s, that really does remain to be seen. So we’re just going to have to wait and see, and the best we can do is what we’ve done, which is study up on this and look at historical experience, read the literature, and think about the factors that might matter, and then we’ll just have to see, have to see how it goes.”
• Balanced Labor Market: “In the labor market, conditions remain solid. Payroll job gains averaged 170 thousand per month over the past three months. Following earlier increases, the unemployment rate has stabilized since the middle of last year, and at 4.1% in December, remains low. Nominal wage growth has eased over the past year, and the jobs-to-workers gap has narrowed. Overall, a wide set of indicators suggests that conditions in the labor market are broadly in balance.”

IMF Projects Below Average World Economic Growth

Key takeaways: Global growth is projected at 3.3% both in 2025 and 2026, below the historical (2000–19) average of 3.7%.  The forecast for 2025 is broadly unchanged from that in the October 2024 World Economic Outlook (WEO), primarily on account of an upward revision in the United States, offsetting downward revisions in other major economies. Global headline inflation is expected to decline to 4.2% in 2025 and to 3.5% in 2026, converging back to target earlier in advanced economies than in emerging market and developing economies.

International Monetary Fund (IMF) 2025 World Economic Outlook Growth Projections (Jan. 2025):

Monthly and YTD returns

Source: Morningstar asset class screening total return 1 month USD and total return YTD as of February 1st, 2025¹⁰

This content is being published by Amerant Investments, Inc (Amerant Investments) a dually registered broker-dealer and investment adviser registered with the Securities and Exchange Commission and member of FINRA/SIPC. Registration does not imply a certain level of skill, endorsement, or approval. Amerant Investments is an affiliate of Amerant Bank

Definitions:

• ⁽¹⁾ Gross Domestic Product (GDP): A comprehensive measure of U.S. economic activity. GDP is the value of the goods and services produced in the United States. The growth rate of GDP is the most popular indicator of the nation’s overall economic health. Source: Bureau of Economic Analysis (BEA).
• ⁽²⁾ GDPNow is not an official forecast of the Atlanta Fed. Rather, it is best viewed as a running estimate of real GDP growth based on available economic data for the current measured quarter. There are no subjective adjustments made to GDPNow—the estimate is based solely on the mathematical results of the model. In particular, it does not capture the impact of COVID-19 and social mobility beyond their impact on GDP source data and relevant economic reports that have already been released. It does not anticipate their impact on forthcoming economic reports beyond the standard internal dynamics of the model.
• ⁽³⁾ The Current Employment Statistics (CES) program produces detailed industry estimates of nonfarm employment, hours, and earningsof workers on payrolls. CES National Estimates produces data for the nation, and CES State and Metro Area produces estimates for all 50 States, the District of Columbia, Puerto Rico, the Virgin Islands, and about 450 metropolitan areas and divisions. Each month, CES surveys approximately 142,000 businesses and government agencies, representing approximately 689,000 individual worksites. Source: Bureau of Labor Statistics (BLS).
• Initial Claims: An initial claim is a claim filed by an unemployed individual after a separation from an employer. The claimant requests a determination of basic eligibility for the UI program. When an initial claim is filed with a state, certain programmatic activities take place and these result in activity counts including the count of initial claims. The count of U.S. initial claims for unemployment insurance is a leading economic indicator because it is an indication of emerging labor market conditions in the country. However, these are weekly administrative data which are difficult to seasonally adjust, making the series subject to some volatility. Source: US Department of Labor (DOL).
• ⁽⁴⁾ The Consumer Price Index (CPI):Is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. Average price data for select utility, automotive fuel, and food items are also available. Source: Bureau of Labor Statistics (BLS).
• ⁽⁵⁾ The national unemployment rate: Perhaps the most widely known labor market indicator, this statistic reflects the number of unemployed people as a %age of the labor force. Source: Bureau of Labor Statistics (BLS).
• The number of people in the labor force. This measure is the sum of the employed and the unemployed. In other words, the labor force level is the number of people who are either working or actively seeking work. Source: Bureau of Labor Statistics (BLS).
• ⁽⁶⁾ Advance Monthly Sales for Retail and Food Services:Estimated monthly sales for retail and food services, adjusted and unadjusted for seasonal variations. Source: United States Census Bureau.
• ⁽⁷⁾ Federal Open Market Committee (FOMC): Responsible for implementing Open market Operations (OMOs)–the purchase and sale of securities in the open market by a central bank—which are a key tool used by the US Federal Reserve in the implementation of monetary policy. Source: Federal Reserve.
• ⁽⁸⁾ The Federal Funds Rate: Is the interest rate at which depository institutions trade federal funds (balances held at Federal Reserve Banks) with each other overnight. When a depository institution has surplus balances in its reserve account, it lends to other banks in need of larger balances. In simpler terms, a bank with excess cash, which is often referred to as liquidity, will lend to another bank that needs to quickly raise liquidity. Source: Federal Reserve Bank of St. Louis.
• ⁽⁹⁾ The “core” PCE price index: Is defined as personal consumption expenditures (PCE) prices excluding food and energy prices. The core PCE price index measures the prices paid by consumers for goods and services without the volatility caused by movements in food and energy prices to reveal underlying inflation trends. Source: Bureau of Economic Analysis (BEA).

Sources: U.S. Bureau of Economic Analysis (BEA), Bureau of Labor Statistics (BLS), U.S. Department of Labor (DOL), Federal Reserve, Federal Reserve Economic Database (FRED), Federal Reserve Bank of Atlanta, U.S. Census Bureau, Department of Housing and Human Development (HUD), U.S. Department of Agriculture, U.S. Energy Information Administration (EIA), U..S Department of the Treasury, Office of the United States Trade Representative (USTR), U.S. Department of Commerce, data.gov, investor.gov, usa.gov, congress.gov, whitehouse.gov, U.S. Securities and Exchange Commission (SEC), Morningstar, The International Monetary Funds (IMF), The World Bank (WB), European Central bank (ECB), Bank of Japan (BOJ), European Parliament, Eurostats, Organization for Economic Co-operation and Development (OECD), National Bureau of Statistics of the People’s Republic of China, Organization of the Petroleum Exporting Countries (OPEC), World health organization (WHO).

⁽¹⁰⁾ Financial Markets – Monthly and YTD returns (Table): Asset class performance is in USD and refers to the following indices: Equities: US Large Caps (S&P 500), Emerging Markets (MSCI EM), Europe (MSCI Europe), Japan (MSCI Japan). Fixed Income: 10-Yr. US Treasuries (BofAML US Treasury Current 10-Yr.), Emerging Markets Sovereign (USD) (JPM EMBI Global), US High Yield (BofAML US HY Master II), US Investment Grade (BarCap US Aggregate Bond), and Developed Markets Sovereign (excl. US) (JPM GBI Global Ex US). Source: Morningstar.

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This information is obtained by AMTI from third-party providers from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.  All expressions of opinion are subject to change without notice in reaction to changes in market conditions. By using such information, you release and exonerate AMTI from any responsibility for damages, direct or indirect, that may result from such use. Consult the issuer of any investment for the most up-to-date and accurate information.

All references to performance refer to historical data. There could be benchmarks used that do not reflect the performance of funds or other products with similar objectives

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Additional Risks:

• Past performance is no guarantee of future returns.
• There is no assurance the Fund will pay distributions in any particular amount, if at all. Any distributions the Fund makes will be at the discretion of the Fund’s Board of Trustees
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• Volatile markets: Because an investor may be unable to sell its shares, an investor will be unable to reduce its exposure in any market downturn
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