What is a trust? Tag

THE PAUSE THAT REFRESHES?

Many feared recession in 2023. Instead, the U.S. economy growth rate actually accelerated – clocking in at 3.1% after posting a 0.7% growth rate in 2022. This stronger growth and continued labor market tightness have led investors to reset expectations for Fed policy. Markets now expect the first cut in May (we think June) and four rate cuts in all of 2024 (we think three).

POLICY AND POLITICS

Focus remains on monetary policy with investors parsing Fed minutes and statements. Rate cut hopes drove much of the Santa Claus rally, but the Fed has not committed to investors’ full wish list. Politics will battle monetary policy for mindshare; ~40% of the planet can cast a vote this year, including the U.S. and Taiwan (which just reelected its nationalist party)...

MISSION ACCOMPLISHED? Entering 2024, the Federal Reserve appears set to proclaim its inflationary mission accomplished – and in soft-landing fashion. Investors welcomed the Fed’s evolving message on monetary policy, with global equity markets up 11% (12% in the U.S.) in the quarter. The strong finish to...

SUPPORTIVE FUNDAMENTALS

Global markets were strong over the past month as “soft landing” supportive fundamentals and market conditions unfolded. Increasing confidence in moderating inflation drove significant changes in expectations for the Fed (pricing in earlier rate cuts), and a steep drop in long-term rates. Lower rates combined with still reasonably durable labor market and consumer spending conditions drove a re-rating upward of equity markets as the scenario of falling inflation and non-recessionary growth conditions over the next year became increasingly priced in...

DON’T COUNT ON CUTS

Global markets remain volatile, with equities starting the month lower before declining long rates toward the end of the month brought investors back to stocks. Rates fell as investors read the Federal Reserve communication as relatively dovish, combined with some softer macroeconomic readings including a somewhat weaker U.S. employment report for October...

ALL ABOUT RATES Global markets were weak over the past month, with both stocks and bonds posting negative returns. The catalyst was principally the material rise in interest rates over the course of the month – driving losses in fixed income and pressuring equity valuations. Until...

IT’S A MARATHON… As most of the world’s population exits summer, marathon season resumes – with two of the six majors* (Berlin and Chicago) bookending the start and end of the third quarter, and New York coming up in November. The “it’s a marathon, not a...

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...