Market Commentary & Forecast

After closing out a year in which returns were dented by decelerating economic data worldwide and a Federal Reserve seemingly bent on a steady pace of interest-rate hikes, markets gave investors some relief in the first quarter of 2019. The S&P 500 is better by 13.6% year-to-date, and 21.2% since the December 24th near-term bottom; international equities, as measured by the MSCI All-World Ex-U.S. Index, gained 10.4% in the quarter.[1] Fixed Income also fared well, with the Bloomberg Barclays Aggregate Bond Index improving 2.9% amid a rise in sovereign bond prices and a reasonably healthy credit environment.

After years of advances, global equity markets ended 2018 with the stinging reminder that they can still reverse on a moment’s notice. A year that began amidst historically low inflation, accelerating economic growth and expanding equity valuations ended with an eruption in volatility and the meaningful outperformance of broad fixed income benchmarks—precisely the reverse of what most strategists had predicted.