US stocks were flat in March as investors reevaluated whether the new administration will be able to impact taxes, regulations and infrastructure spending to the same degree as projected after the election. Economic reports were again positive for the most part with 235,000 jobs added in February, the unemployment rate falling to 4.7% and wage growth picking up, rising 2.8%, consumer confidence hit its highest level in 16 years, and fourth quarter GDP was revised up to 2.1%, from 1.9%, above expectations. On the downside auto sales were flat, retail sales had their weakest gain since last summer and durable goods orders were subdued. Oil prices eased over the month falling over 6% on robust supply. US stocks edged up 0.07% in March raising the year to date performance to 5.74%.
Foreign stocks surged in March as economic data continues to improve. Germany posted a 2.8% increase in industrial production in February and the eurozone jobless rate hit its lowest level since 2009. The ECB said they will not reduce the bond purchase program they have in place, or cut it short despite recent positive economic news, but Draghi did state that it’s unlikely they will need to continue past the end of this year. The UK officially notified the EU of its intention to leave setting off a likely acrimonious two year negotiation. In a victory for the EU, Geert Wilders, an anti immigration candidate in the Netherlands failed to make inroads in the Dutch election. Brazil’s recession reached two years as GDP contracted 3.6% in 2016. Developed markets outpaced emerging markets for the month, but emerging markets well outpaced developed markets for the quarter. In March, international stocks rose 2.56%, bringing the year to date performance up to 7.92%.
Bonds were flat in March as interest rates ticked up slightly. As expected the Fed elected to raise interest rates a quarter of a percent to a range of 0.75% to 1.0% at its March meeting. The increase was made as the Fed views the US economy as being on more solid footing. They still expect to make two additional quarter percentage point increases this year. The projections for the rest of the year were less aggressive than the market had anticipated. The 10 year Treasury yield ticked up slightly for the month rising to 2.40%, but is down from 2.45% to start the year. For the month shorter term bonds generally outpaced longer terms bonds while it was the opposite for the quarter. Muni bonds were the top performing sector for the quarter and month. The broad bond ticked down 0.05% in March, but is up 0.82% for the year to date.
|Index Performance||March||Q1||Trl 1 Yr|
|US Stock (Russell 3000)||0.07%||5.74%||18.07%|
|Foreign Stock (FTSE AW ex US)||2.56%||7.92%||13.85%|
|Total US Bond Mkt. (BarCap Aggregate)||-0.05%||0.82%||0.44%|
|Short US Gov. Bonds (BarCap Gov 1-5 Yr)||0.05%||0.39%||-0.13%|
|Municipal Bonds (BarCap 1-10yr Muni)||0.12%||1.55%||0.21%|
|Cash (ICE ML 3Month T-Bill)||0.02%||0.10%||0.36%|