In March, equity markets began with a sharp correction then had a brief rally after the FOMC meeting which did not manage to follow through. The S&P500 finished down 1.57% in an otherwise choppy and volatile month. In contrast, bonds managed to gain some ground finishing with positive performance on the month. Commodities resumed their long term downward trend with the exception of Copper. The industrial metal has begun to show signs of breaking out of a four year long bear market. Copper is a key metal used in building residential and commercial property, and higher prices may reflect an uptick in global economic activity. Economists often refer to metal as “Dr. Copper” since it has had a better than average ability to forecast economic trends. But two months of positive performance does not make a new trend, and at this point it is a development worth watching out for. In the currency markets, the US Dollar picked up additional momentum in spite of a drag from Federal Reserve communication suggesting they may not raise rates as fast as the market was expecting. As we have highlighted previously, the trend in the Dollar is well established and has been persistently strong across time periods.
A New Season for the Economy?
On March 20th the western world welcomed a change in seasons as spring replaced the long and cold winter. Why do seasons change? The four seasons are the result of differences in the level of sunlight—which in turn is determined by how our planet orbits the Sun and the tilt of its axis (source: Farmer’s Almanac). For world financial markets, the seasons are largely determined by the Fed which sets the level of interest rates. [Read more…]