Weekly Commentary

March 29, 2024

Markets had a fairly uneventful shortened week, with the Easter holiday creating a quiescent environment for stocks and bonds alike.?

For the month of March, the S&P, in a reversal of previous months, outpaced the tech-heavy Nasdaq, but for now, investors continue to see the "Goldilocks" scenario of an accommodative Fed, coupled with slowing, but still positive economic growth.? This has created a strong case for stocks, but we continue to believe that economic growth will likely underperform over the medium?term, which will lead to lower earnings growth for the remainder of the calendar year.

The US 10-year rate rallied to the 4.20% range, giving longer duration assets a better bid, although the key rate changed only slightly for the month of March.??

As for other assets, we are observing the price of precious metals as a potential hedge against a persistently problematic fiscal deficit in the United States, as well as a way to protect against inflation that remains higher than the Fed's target 2% rate.? Specifically, gold is near or at an all-time high, and given the fundamental positives involved, the technicals in the spot price also look favorable.??

As we head into the second quarter, we are looking for long duration to finally be a significant source of positive alpha, earnings to begin to wane, and the economy to show signs of a slowdown.? Look for volatility to spike from the historic lows we are experiencing as well.? In other words, things should be very interesting in the weeks and months to come.?