As the first half of 2023 is behind us, equity markets proved the most resilient. A June highlight was a pause by the Fed in lifting short term interest rates. At their June meeting, Chairman Powell left interest rates at 5%-5.25% (the first pause in 15 months of rate increases) but did suggest rates may need to rise further to tackle sticky inflationary pressures. Surprisingly, solid economic data and a vigilant FOMC kept bond markets muted. Cash returns continue to adjust higher as 2 more increases in short-term rates are being priced into money markets.

Fiscal policy drove the bond market last month, AI drove equity markets. After an expected early month Fed rate hike (to 5%-5.25%), global markets were fixated on the US debt ceiling. Short term interest rates (including T-bills) had a tumultuous month, as investors focused on Treasury Secretary Yellen’s early June “x-date” of US solvency. Wall street’s new probability game last month: the ability of Congress to negotiate raising the debt ceiling/budget cuts to avoid calamity once again. The political theater subsided on month end, and both parties rejoiced on their efforts to avoid a US default. It was just slightly better than the 2011 “re-make”.

Despite the overhang from last month’s bank turmoil, markets rebounded as investors re-focused on earnings, economic and inflation data. While most data suggest the Federal Reserve Bank has not completely ended their monetary tightening cycle, they are closer to a “wait and see” environment.

“March Madness” will probably be a widely used moniker for the last month in financial markets. Despite the growing macroeconomic risk that arose from the Silicon Valley Bank and Credit Suisse fallout, volatile markets ended with positive total returns in major asset classes. The Piton team continues to offer customized portfolios and solutions to meet your needs through all market and interest rate environments. Please let us know how we can help you and your clients, we are here to serve as an extension of your team.

Piton announced that three of their investment strategies are now available on SMArtX Advisory Solutions (“SMArtX”), a leading innovator in unified managed accounts (UMA) technology and architect of the SMArtX turnkey asset management platform (TAMP).

The events over the past week remind us that the primary tenent of cash is safety. Uninsured balances and liquidity considerations at certain financial institutions carry risk. Piton offers diversified, customized cash management solutions with a focus on safety, liquidity and yield.