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April 1, 2018

March was probably one of the most volatile months we have had in quite some time in the markets. The nervousness has been a result of talk of trade wars, the economic outlook and interest rate hikes.

At its most recent meeting, the Federal Reserve acknowledged an upgraded outlook for the economy by including an entirely new sentence in its statement which said, “The economic outlook has strengthened in recent months.” The statement noted, however, that, “Recent data suggest that growth rates of household spending and business fixed investment have moderated from their strong fourth-quarter readings.

The Federal Reserve has raised interest rates six times since the Financial Crisis and signaled that at least two additional rate hikes are coming in 2018. On March 21st , the central bank announced an increase in its benchmark interest rate target range by 0.25% to a new band of 1.5%-1.75%. All eight voting members of the FOMC voted in favor of this latest decision.

In February, the unemployment rate stood at a 17-year low of 4.1% for the fifth-straight month. In the first quarter, GDP growth hit an annualized rate of 2.5% while manufacturing, small business, and consumer sentiment surveys all continue to hold near post-crisis highs. The unemployment rate is expected to fall to 3.6% by the end of the decade according to the Fed’s latest forecasts, while inflation should hit 2.1% in 2020, slightly above the Fed’s 2% target.

So far this year the Dow and the S&P 500 are off 2.49 and 1.22 percent respectively while the NASDAQ is positive 2.32 percent. The 10 year Treasury is currently yielding 2.77 percent.