FTDS - Q2 2024 Capital Markets Outlook

2024-05-03 07:40:00 ET

Summary

• Following last year's strong close, first quarter returns for the capital markets were driven by hope and a measure of fear.
• The bond market did not fare as well, beginning first with the Fed urging caution about the timing and magnitude of rate cuts versus market participants' expectations.
• Areas we deem fertile ground from a valuation perspective here are defensive sectors such as utilities, healthcare, and consumer staples.

By Walt Czaicki, CFA

Transcript

Following last year's strong close, first quarter returns for the capital markets were driven by hope and a measure of fear. Hope was manifested in equity returns, which were positive across the board, despite the fact that interest rates and inflation ticked a little bit higher. Bonds had more of a mixed picture, with credit markets holding up fairly well. But the U.S. government bond market in particular lagged in the face of higher interest rates. Whether it was inflation reports, continued strong labor markets, or confirmation that the economy was doing well, investors looked for the prospect of higher profit growth that often accompanies the stronger economy....

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