BNY Mellon Global Markets – Weekly Market Commentary

We ended the first quarter in a fairly neutral position, despite what started out
as a fairly volatile global market influenced by geopolitical flare-ups,
contagion concerns (read: EM and China) and the return of global growth
concerns in the developed and developing world. Volatility has since collapsed
and most returns were flat to positive in March, with credit outperforming
losses posted in the aggregate and treasury indices due to higher treasury
yields. Equity gains were also mostly positive, although recent rotations have
favored lower beta sectors in the S&P, such as utilities and healthcare,
the top performing S&P economic groups. We feel as if things are at an
uncomfortable truce at the moment with investors needing to either embrace risk
driven by continued central bank largess or move to the more cautious stance
that dictated trading in mid-January into February. Many of the questions over
the next moves by central banks and fiscal authorities will become clearer over
the next few months, along with a better idea of whether the weather was truly
a one quarter phenomena. The non-farm report on Friday may go a long way in
providing some answers, although we think that a weak print will be viewed a
casualty of the polar vortex, while a strong print will provide signs of green
shoots. For our part, we think we will need April data to truly ascertain the
strength of the economy. One thing that is clearer to us is the affirmation of
Yellen’s position as a true dove, which will continue to drive Fed policy. Read
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