TAKING THE UNDER Global equities were roughly flat over the past month against a flattish backdrop for interest rates, with non-U.S. equity markets trailing due to a strengthening of the U.S. dollar. U.S. large cap growth stocks continued to outperform, masking softness in value and small...
COMPLACENCY CONCERNS The past month was marked by a broadening of equity market performance amidst a rise in interest rates. Now north of 4%, the 10-year U.S. Treasury yield is approaching the highs from last October – leading growth stocks to underperform. Though off the highs...
GOLDILOCKS WITHOUT THE BEARS? Financial markets in the U.S. appear to be increasingly pricing in a Goldilocks scenario of both recession avoidance and inflation returning to Federal Reserve (Fed) targets – shaking free of residual bearish sentiment about weaker growth and sticky inflation. U.S. equities continued...
PARTY ON? The U.S. economy continues its post-pandemic expansion – resisting the growth-dampening intentions of restrictive monetary policy. The Federal Reserve (Fed) has hiked interest rates by a cumulative 5% the past five quarters (a brisk 1% per quarter pace); in response, the labor market has...
FROM CONCERN TO CHURN? U.S. equities performed well over the past month as the resolution of the debt ceiling and further passage of time without additional regional bank issues reduced the level of concern on display in the market, including a drop in the equity market...
REACHED THE PEAK? After a 5% move in the Fed funds rate in just over a year, it appears that we may have finally reached the peak policy rate for this cycle in the U.S. – or perhaps more accurately, a plateau in rates. Inflation continues...
APPROACHING STALL SPEED Banking system concerns of a month ago have largely faded following liquidity support from the Federal Reserve and the passage of time without further failures – though not without consequence. The extension of credit from smaller regional banks is likely to decline...
Signs of Stress The surprise failure of Silicon Valley Bank (SVB) has brought fears of instability of the financial system, sending a shockwave of uncertainty across the capital markets. Very elevated volatility in Treasuries, including a dramatic drop in rates across the curve, highlight investor concerns...
Looking Across The Valley Global equities are off to a strong start in 2023. Investors have chosen to look across the valley of softening fundamentals – focusing instead on declining inflation, the near completion of central bank rate increases and moderating long-term rates. Notably, the...
SLOWING BUT SUSTAINABLE GROWTH The momentum continues under this remarkable recovery, with strong economic growth and profitability that have driven the equity rally. These gains have some investors wondering when the “good times” will end. Global growth is expected to peak at over 6.5% in the...