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Capital Markets Recap - March 2019



  • U.S. equities were positive in March and finished the first quarter with the best returns in seven years. Real GDP increased by an annualized rate of 2.2% in the fourth quarter, a downward revision from the 2.6% initial estimate. The unemployment rate ticked down to 3.8% in February in part due to furloughed federal employees returning to work after the partial government shutdown. Consumer confidence decreased in March. Consumers remain poised for continued near-term economic expansion, though sentiment has been trending down since the summer of 2018. U.S. manufacturing operating conditions improved moderately in March but dipped to levels last seen in mid-2017.
  • International equities and emerging market equities trended higher in March. The Eurozone manufacturing sector experienced the greatest contraction in nearly six years as demand deteriorated with concerns of trade wars, political uncertainty, and Brexit. U.K. manufacturing PMI hit a 13-month high. Preparations for Brexit in the U.K. led to strong increases in inventories as companies tried to lock in prices and certainty of supply. China saw operating conditions improve for the first time since November and business outlook sentiment improved to a 10-month high. Chinese employment expanded for the first time in over five years.
  • Fixed income investment returns were solid in March. The yield curve inverted during the month with the 3-year U.S. Treasury Note offering a higher yield than the 10-year. Buyers of bonds are predicting lower interest rates in the future and see the inverted yield curve as an indicator of an economic recession. 10-year Treasury yield decreased to 2.4% to end the month of March.


  • Broad U.S. stocks were positive (up 1.5%) for the month and on a 1-year basis (up 8.8%).
  • Size – Large-cap (up 1.7%) and mid-cap (up 0.9%) equities outpaced small-cap (down -2.1%) equities in March and large-cap stocks led on a 1-year basis over small-cap stocks (9.3% vs. 6.5%).
  • Style – Growth stocks (up 2.5%) outgained value stocks (up 0.4%) in the month and continue to meaningfully outperform on a 1-year basis (12.1% versus 5.3%, respectively).


  • After experiencing a volatile end to 2018, the global equity markets were strongly positive during the first quarter of 2019.
  • It is a good time for investors to take stock of their risk appetite and review their current ability to endure continuing market risks.
  • Rebalancing portfolios back to their strategic allocations and reassessing adequacy of cash reserves continue to be important to mitigate risk.
Sources: Morningstar, Inc., Barclays Capital, Russell and MSCI, U.S. Bureau of Labor Statistics, The Conference Board, IHS Markit, The Federal Reserve (central bank of United States), The Bureau of Economic Analysis (U.S. Department of Commerce) & U.S. Department of Treasury

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