Bumpy Start

Last week, I wrote that the past few weeks had been a roller coaster. And it looks like we’re still on that ride. Since that April 10 column, the S&P 500 fell to as low as 5115 and as high as 5459, while the 10-year Treasury yield has moved around considerably, with an average intraday range of 15 basis points (i.e. 0.15%). Bumpy indeed.

Of course, this comes after a stretch of over two years of strong returns, so some might say that investors were “due” for a tougher year. Through April 16, the S&P 500 is down 10.3%, though it’s down a larger 14.1% from the all-time high of 6144 on February 19. Is the current drawdown enough of a flush to set markets up for a durable rebound? There’s no way of knowing for sure, but looking back at historical instances that resemble the current moment can give us a hint.
 

Historical S&P 500 Performance After a Poor First Four Months

The chart above tracks the performance of stocks in the 13 post-WWII years where they were down 5% or more through April, and shows how they performed in the following months. Here are some key takeaways:

•   In nine of the 13 years, returns were negative over the next six months, with an average return of -6.3%.

•   Returns in the following calendar year have been strong, with an average return of +17.0%.

It goes without saying, but past performance is not indicative of future results. Just because markets usually went on to decline further doesn’t mean they’ll do so again. Instead, think of history as being helpful with contextualizing the market backdrop.

One year that bucked the historical trend was 2020. The market decline was swift at the start of the pandemic lockdowns, but stocks rallied strongly on the back of significant fiscal and monetary policy support. There’s a notable connection between then and now, as the current market upheaval has been tied to trade policy uncertainty. Perhaps now, like then, a rally will depend in large part on policy developments.

Relationship Breakup

While Treasury markets have been volatile overall, the magnitude of moves has been much more pronounced in longer-term maturities. For example, the 10-year yield fell to as low as 3.86% on April 4 and rose to as high as 4.59% on April 11. Usually, Treasury yields and the U.S. Dollar Index (DXY), which measures the value of the dollar against a basket of other major currencies, tend to move in the same direction. That’s because as yields rise, it often attracts investment from foreigners looking for higher returns on investment, strengthening the dollar and pushing the DXY higher.

However, there’s been a divergence in this pattern recently with the dollar weakening even though Treasury yields have risen. Since the end of February, the DXY is down 7.7%, while 10-year yields are 7 basis points higher.
 

Divergence Between the Dollar & Yields

A possible explanation is that while higher yields should make a market more attractive, all else being equal, concerns about economic growth in the United States and broader geopolitical risks could be offsetting any boost from higher rates. This sort of two-month move, in conjunction with the sharp decline in stocks, is pretty rare, only happening three other times: February 1973, October 1978, and October 1990. Each of these episodes occurred against the backdrop of rising inflation concerns during periods of oil supply shocks and geopolitical instability.

It seems unlikely that a breakup in this relationship will last forever, but it’s an open question when and how the lines will get back together. Some sort of resolution to the policy uncertainty will probably be needed, but it could be a while before that happens.

No Respite from Inflation

Much of the talk around tariffs has been centered around the idea that they would disrupt global supply chains, weighing on economic growth and resulting in higher prices. Or in other words, stagflation. The fear of possible inflation shocks despite a weakening in the economy is a big reason why Federal Reserve officials have talked tough on inflation—contributing to investor concerns that the Fed may hold off on lowering interest rates.

It was pretty surprising then that Treasury yields actually rose in the aftermath of the last two Consumer Price Index (CPI) reports, despite inflation coming in below consensus estimates. Lower inflation usually means the Fed has to do less to keep inflation at bay, which usually means lower interest rates.

The following scatterplot shows the move in the 10-year Treasury yield relative to CPI surprises since the start of 2022, with the recent CPI report a notable outlier.
 

Treasury Yield Reactions to CPI Surprises

Relative to expectations, m/m CPI came in nearly three standard deviations below consensus. Based on 2022-24 statistics, 10-year yields should have declined by 10 basis points, but instead they increased by 9 basis points. Part of this is because while the CPI report had only just come out, in many ways investors considered it already stale due to the tariff developments in April. That speaks to how rapidly the macro backdrop has shifted.

The market environment in the first four months of 2025 has presented a complex picture. Poor initial returns, a decoupling of the dollar and Treasury yields, and an unusual reaction in the bond market to inflation data all reinforce how uncertain things are. However, we’re nearing the point now where new data could provide some sorely needed clarity, potentially setting up investors for clearer skies later in the year—and into the next.

Want more insights from SoFi’s Investment Strategy team? The Important Part: Investing With Liz Thomas, a podcast from SoFi, takes listeners through today’s top-of-mind themes in investing and breaks them down into digestible and actionable pieces.

SoFi can’t guarantee future financial performance, and past performance is no indication of future success. This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite.

Communication of SoFi Wealth LLC an SEC Registered Investment Adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov. Mario Ismailanji is a Registered Representative of SoFi Securities and Investment Advisor Representative of SoFi Wealth. Form ADV 2A is available at www.sofi.com/legal/adv.

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One of the advantages of buying a house with a fixed-rate mortgage is being able to budget for the same payment amount every month.

But if you bundle your insurance premium in with your monthly principal and interest, chances are what felt like a relatively fixed monthly housing payment has started to feel anything but fixed.

Since 2018, the average annual homeowners’ premium nationally has increased 62% to $1,761, or about $147 a month, according to Freddie Mac’s latest 2024 calculations. And costs vary widely, so premiums in some states are four or five times as high as others.

In fact, insurance has become a primary contributor to the country’s housing affordability crisis, in addition to the pandemic surge in real estate prices and a steep increase in mortgage rates.

The average premium climbed 24% between 2020 and 2024 after inching up just 1% over the previous four years, data from Harvard University’s Joint Center for Housing Studies show. And that’s after adjusting for the rapid inflation of recent years.

So is this trajectory the new norm? And if you own a home, do you have any recourse? Here’s what we know and how you may be able to reduce your costs.

The Impact of Climate Change

At a very basic level, insurers set their premiums according to their anticipated risks. When the likelihood they’ll have to pay a claim rises, so do their premiums.

As climate change has made the weather more volatile, the severity and frequency of extreme events like hurricanes and wildfires has increased, increasing the scope of insured damage. Disasters in 2022 and 2024 caused over $180 billion in total damage each year, making them two of the four costliest years on record, according to the National Oceanic and Atmospheric Administration.

This is one reason why insurance premiums vary so much by state. Between 2017 and 2023, Texas, Colorado, Arizona and other states west of the Mississippi — areas prone to tornadoes, hail, and wildfires — saw the fastest premium increases, according to the Federal Reserve Bank of Minneapolis, citing S&P Global data.

In fact, homeowners in tornado- and hurricane-prone states like Nebraska, Louisiana, and Oklahoma pay over $500 a month, more than five times as much as residents of Hawaii, Oregon and Delaware, according to a November analysis by Marketwatch Guides that put the national average at $227.

And a major study released by the U.S. Treasury Department’s Federal Insurance Office in January showed residents in the riskiest 20% of U.S. ZIP codes (those with the highest expected losses) pay 82% more in premiums than those in the least risky ZIP codes.

Plus, these pricier policies may provide less coverage than they used to. Many homeowners in hail-prone areas of the Upper Midwest, for example, are now responsible for a bigger share of roof repair costs, according to the Minneapolis Fed.

And then there are states like California and Florida, where insurers are abandoning disaster-prone markets altogether, forcing many homeowners to get more limited but often more expensive policies from their state’s “insurer of last resort.”

Other Drivers of Price Increases

But climate change is by no means the only factor in the sharp premium increases. In fact, some insurance industry groups have suggested that the link to climate change is sometimes overstated.

Other macroeconomic forces include:

•   The pandemic spike in inflation, which increased the cost of materials and labor needed to repair and rebuild homes

•   An increase in litigation and insurance fraud

•   More people moving into disaster-prone areas

•   A surge in the cost of reinsurance (insurance purchased by insurers) that’s at least partly related to the damage from extreme weather

And there are more typical reasons prices go up, like a change in your circumstances. Maybe you recently added on to your house, filed a claim, or installed what insurers deem an “attractive nuisance” such as a trampoline or swimming pool.

An Uncertain Outlook

While premiums may continue to go up, overall increases are expected to be less dramatic this year, some forecasts suggest. As an industry, insurers are adjusting to the new norms and profits have stabilized, according to the reinsurance giant Swiss Re.

Still, there is a lot of uncertainty. The impact of extreme weather is hard to predict. And new tariffs on U.S. imports could drive up rebuilding costs, Swiss Re said.

What You Can Do

Ok, that’s probably not what you wanted to hear. But as a homeowner, you do have options. Here are some things you can do to potentially lower your costs:

•   Shop around. Premiums can vary significantly by insurer, so it pays to explore all your options. You can do this by calling around on your own, going to an independent broker, or accessing an online marketplace like SoFi’s. (We let you compare quotes from up to 30 top insurers through our partner Experian Insurance Services.) Just make sure you’re comparing apples-and-apples coverage. Lower quotes aren’t necessarily less expensive if they come with reduced protection.

•   Ask your current insurer about discounts. These could be discounts you missed initially or ones you’re newly eligible for (because you’ve gotten married, for instance). Your insurer may reward you for your loyalty, for bundling your coverage with an auto or umbrella policy, or being claim-free for a certain number of years.

•   Increase your deductible. Your deductible is the portion of a claim you pay. Agreeing to shoulder more of it can help reduce your premium, but make sure you could actually afford the additional cost if you needed to make a claim. It’s important to weigh any potential coverage changes like this very carefully. You don’t want to leave yourself underinsured and in a financial bind.

•   Make your home safer. Upgrades cost money, so this is not a money-saver in the short run. But if you’re considering a new roof or installing a security system anyway, you may find that lower insurance premiums are an added benefit.

Next week in our series:
What to consider if you’re shopping around for better rates.

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