January 2023 Monthly Index Returns

Winter is in full swing; we hope everyone is staying warm, especially our friends in Texas.

In equities:

• A strong start to the year as all equity benchmarks shown were positive.  The lowest returning benchmark was MSCI Frontier Markets (+4.5%) while the highest was US REITs (+11.0%).  
• In  the US, growth benchmarks outpaced their value benchmarks during the month, 
• The last 3 months return for several asset classes has been quite impressive, in particular in MSCI EAFE (+20.4%), MSCI EAFE Small Cap (+19.4%), and MSCI EM (+22.2%).  At least some of this return can be attributed to the decline in the US Dollar over this time period. Plus, Europe overall has surprised with some better economic data, which may have benefited from a milder winter.
• Another potential driver of returns may be the fact the central banks across the globe have begun to lower the pace of rate increases.  China's reopening appears to be a positive contributor to non-US markets overall, and in particular emerging markets.

In fixed income:

• Like equities, all fixed income benchmarks were also positive for the month, and have been positive over the last 3 months as well.
• Longer-dated bonds outperformed shorter term bonds, which is what investors should normally expect.  Similarly, Corporates beat Treasuries within the same maturity buckets, which is also what investors should normally expect.
• All eyes are on the Fed today as they wrap up their first meeting of 2023 and decide on what, if any, rate changes will occur.  Market expectations are for the Fed to continue lowering the pace of increases, with a 25 bps increase coming later today.
• The Treasury curve remained inverted at month end.  For reference, the 6 month Tbill yielded 4.81% (the highest point) while the 10 yr Treasury yielded 3.53% (the lowest point).

Please let us know if you have any questions by emailing Support@xyinvestmentsolutions.com

As an additional note, please keep in mind that these reflect historical performance of the current models, not necessarily how accounts were invested in the past.