Market Recap: March 2022

April 05, 2022
March 2022 Market Recap
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Market commentary

  • The Russia-Ukraine conflict continues on a larger scale than most anticipated, leading to human tragedy on a physical and economic front. Severe sanctions on Russia are reverberating across the globe, affecting energy and food prices, especially in the Eurozone.
  • Core PCE increased 5.4% year-over-year, the highest rate of increase since 1983.
  • U.S. GDP was revised slightly lower to 6.9% in the 4th quarter and 5.5% for 2021. Current expectations for 2022 GDP growth are more muted.

Select economic and market data

Statistic (monthly unless noted)

Current

Previous

U.S. GDP (quarterly) 6.9% 2.3%
Consumer Confidence 107.2 110.5
Consumer Price Index 0.5% 0.6%
Retail Sales 0.3% 3.8%
Unemployment Rate 3.6% 3.8%
2-Year Treasury Yield 2.33% 1.43%
10-Year Treasury Yield 2.34% 1.83%

 

Equities

  • Even after rallying at the end of March, the major U.S. indices suffered their worst quarter since Q1 2020 (the start of the COVID-19 pandemic). The DJIA was down 4.1% in the quarter while the S&P 500 and NASDAQ were down 4.6% and 8.9%, respectively.
  • The major U.S. indexes and Foreign Developed are still positive over the past 12 months, while Small Cap and Emerging Markets indexes have posted a loss.
Equities Indices March 2022

Fixed income

  • As expected, the Fed raised rates by 25 basis points in March. The market is pricing in as many as six more hikes in 2022.
  • The curve has flattened significantly, with 2-year and 10-year Treasury yields within 1 basis point at the end of March.
Fixed Income Indices March 2022

Strategic outlook

  • Neutrally positioned on equities, while slightly favoring international over large cap domestic for long-term return potential.
  • Finding value in select domestic equities while trimming outsized “growth” exposure.
  • Maintaining shorter-duration fixed income structure as a low but rising interest rate environment is likely to persist.
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