Questions about the health of the global economy continued to weigh on markets during the quarter. Oil prices retrenched further while the Bank of Japan surprised investors by lowering short-term interest rates below zero. With this as backdrop, equities continued their global sell-off, with U.S. large caps returning -5.0% and international returning -7.2%. The tech-dominated Nasdaq, dominated by growth stocks, returned -7.9% and domestic small caps returned -8.8%. Bonds functioned as a safe haven during the month, with intermediate core bonds returning 1.4% and municipals 1.2%. Investors effectively drove down yields on 2yr and 10yr Treasuries to levels not seen since April 2015.
- After raising short-term interest rates in December, the Federal Reserve revealed in its meeting minutes that they remain concerned that inflation could remain sub-2% for longer than expected, which could impact the timing and amount of future rate hikes
- The European Central Bank (ECB) and Bank of Japan (BOJ) continue to pursue diverging monetary policy from the Federal Reserve, as the two central banks reaffirmed their low-rate policy to address low inflation and stagnant economic activity
- WTI crude oil briefly traded below $30/bbl mid-month as weakening manufacturing data in the U.S. and China and increased exports from Iran further exasperated the global supply/demand imbalance
|File Size: ||189 kb|
|File Type: || pdf|
Notes: 1) Sources: Bloomberg, J.P. Morgan Asset Management, Morningstar, Hedge Fund Research, Bureau of Labor Statistics, Bureau of Economic Analysis. 2) Data as of the date of this report unless otherwise noted. 3) U.S. GDP measures the percentage change during the referenced quarter as published by BEA. 4) Consumer Price Index for All Urban Consumers: U.S. City Average, All Items Less Food and Energy is based on 12-month percent change as published by BLS. Disclosures: This material is provided for informational purposes only and does not constitute an offer or solicitation by HFS, or its subsidiaries or affiliates, to invest in these indices or their constituent products. The data contained herein are from referenced sources which HFS believes to be reliable. This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. The views expressed are those of HFS. They are subject to change at any time. These views do not necessarily reflect the opinions of any other firm. Investing involves a high degree of risk, and all investors should carefully consider their investment objectives and the suitability of any investment. Past performance is not necessarily indicative of future results. All data is as of the date of this report unless otherwise noted.