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Education & Insights

January 2024 Monthly Commentary Thumbnail

January 2024 Monthly Commentary

The start of 2024 brought about a sense of uncertainty following the robust performances witnessed across various market sectors in the last few months of 2023. In early January there was a perceived overreaction to the FOMC pivot and benign economic indicators, resulting in a retracement of both equity and bond prices. However, as the month unfolded, a favorable “goldilocks” scenario emerged, characterized by lower inflation and a resilient consumer outlook. This contributed to a mixed performance for both equities and bonds. Expectations of the Federal Reserve transitioning away from restrictive monetary policies sooner rather than later gained momentum and was clarified further by Chairman Powell during the January meeting. The Fed actions, along with a few other month-end news reports, prompted a decline in interest rates, allowing stocks to continue their upward trajectory reminiscent of the trends observed in 1999.

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December 2023 Monthly Commentary Thumbnail

December 2023 Monthly Commentary

December marked another significant month in a historic two-month rally to conclude 2023. While the month’s returns did not surpass November returns, it came close. The period saw robust jobs data and continued softening inflation statistics, while the Federal Reserve Open Markets Committee (FOMC) delivered the biggest gift to investors. It was the “pivot” of the year, as the FOMC signaled the end of tightening monetary policy, indicating that inflation was under control and that monetary easing would be the focal point for 2024. Notably, the dot plots from FOMC members suggested three interest rate decreases in 2024, while markets have priced in substantially more than that. Consequently, interest rates and risk premium spreads experienced a sharp decline, propelling equity markets to reach new record levels.

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November 2023 Monthly Commentary Thumbnail

November 2023 Monthly Commentary

While equity market returns outperformed the bond market, November marked a pivotal point in the interest rate cycle, bringing several bond indices back into positive territory for the year. Historic monthly moves were witnessed in credit sectors, driven by narrowing risk premiums and lower interest rates, contributing to strong total returns.

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October 2023 Monthly Commentary Thumbnail

October 2023 Monthly Commentary

The bond market has become a pivotal factor for macro investors and asset allocators. Many markets seemed to be in a wait-and-see mode, monitoring whether yields would continue to rise significantly or stabilize as longer-term support levels. Notably, in the volatile month of October, the US 10-year note surpassed a 5% yield level on the 23rd, marking the first time since July 2007. Equally significant for the market was the ongoing “re-steepening” of the yield curve.

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September 2023 Monthly Commentary Thumbnail

September 2023 Monthly Commentary

In September, and throughout the third quarter, we were reminded that increased interest rates can have a significant impact on global markets. During this period, cash continues to be a crucial asset class, as both equity and fixed income markets faced challenges. Aside from concerns about a possible government shutdown, which ultimately did not materialize in September, the primary focus for investors was on the actions of the FOMC and the incoming economic data.

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June 2023 Monthly Commentary Thumbnail

June 2023 Monthly Commentary

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.

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