It is a big week! The Fed is having their next meeting May 3-4, where it is widely expected they will raise the Fed Funds rate by 50 bps in a push to lower and stabilize inflation. All eyes remain on the Fed and other central banks, as the US is not alone in experiencing higher inflation. And then we have Cinco de Mayo (May 5).
- All equity indexes shown have negative returns for April, the last 3 months and YTD. Only the S&P 500, the R1000V, Global REITs, and US REITS have positive returns over the last 1 year.
- Frontier markets, which in part benefited from their exposure to commodities, was the best performing equity index for the month, declining -2.7%. Small cap growth (-12.3%) was the worst.
- The S&P 500's April return of -8.7%. Since January 1970, there have only been 14 months that experienced a worse return in the S&P 500 vs. April 2022.
- The US Dollar has continued to strengthen, which has had a negative impact on international equity returns.
In fixed income:
- Only cash has experienced a (slight) positive return over all time periods shown with 1-5 Yr TIPS increasing by 0.2% for the last 3 months and 2.7% for the last 1 yr.
- Yields have risen across the Treasury curve as expectations for interest rate increases mount. For example, the 10-year Treasury rose from 2.32% on March 31 to 2.89% on April 29. According to the Wall Street Journal, this was the largest monthly increase in the 10-year Treasury since December 2009.
Keeping things in perspective, a simple portfolio consisting of 60% MSCI ACWI and 40% Global Agg Hdg USD is down -10.7% through the first four months of 2022. This same portfolio was down -12.6% for the first three months of 2020, the beginning of the global pandemic. While no one likes to see negative returns, it is a good reminder to clients that we have been through tough markets in the recent past.
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.