Welcome back to the Monthly Market Wrap from YCharts, where we break down the most important market trends for advisors and their clients every month. As always, feel free to download and share any visuals with clients and colleagues, or on social media.
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Equities posted their first winning month of 2022, with the S&P 500 gaining 3.7% and the tech-heavy Nasdaq 3.5%. Utilities led the way in sector performance, rising 10.3%. All sectors with the exception of Financials ended March in the black, and even Financials slipped by only 0.1%. For the year, however, the S&P 500 is down 4.6% while the NASDAQ has fallen 9.0% year-to-date.
Treasury yields continued roaring higher as the Federal Reserve confirmed a series of rate hikes would be coming down the pipe. Most notably, multiple inversions have appeared in the yield curve, with the 3-Year and 5-Year rates rising beyond the 10 and 30-Year yields, the latter pair of which fell slightly in late March. Once again, the 2-Year posted the largest month-over-month yield increase, up to 2.28% from 1.44%. Over in Germany, the country’s long-term rate fell back into negative territory temporarily but ended March yielding 0.62%, its highest yield in four years.
Surprise, surprise. Inflation rose again, now for the sixth straight month, to 7.8%. Oil remained well above $100 per barrel, and the average US Retail Gas Price was $4.33 per gallon as of month’s end. After being beaten down for a couple months, major cryptocurrencies Bitcoin, Ethereum, and Cardano staged a rally in March.
Ladies and gentlemen, it’s yield curve inversion season.
Over the past year, the yields on shorter-term treasuries have risen steadfastly, with rates really picking up in the last month. In fact, those yields have surpassed some longer-duration instruments, causing a yield curve inversion.
Specifically, the 10-5 Treasury Yield Spread is now inverted by 10 basis points, while the 10-3 spread is upside down by 13 bps. But perhaps most surprising of all, the yield on the 3-year Treasury is currently outperforming that of the 30-year, the longest-term bond issued by the United States.
The last three times these yield spreads inverted, a recession followed shortly thereafter in each instance. In 1995, the spreads flirted with inversion but no recession followed. With the 10-5, 10-3, and 30-3 yield spreads now inverted, the question on everyone’s mind is, is trouble looming for the economy or market?
Though equities gained back some previously lost ground in March, growth stocks did so at a higher clip than value. The iShares Russell 1000 Growth ETF (IWF) advanced 4.0% in March, while its Value counterpart (IWD) rose 2.9%. But both equity styles are still negative through the first quarter of 2022; growth is down 9.0% whereas value is a modest 0.7% lower from the start of the year. However, growth is still outperforming value by a margin of 3.4 percentage points over the last twelve months.
The price of Gold in USD was $1,953.80 per ounce at March’s end, representing a healthy monthly increase of 2.3%. Despite inflation pressures and other risk-off market forces coming into play, the SPDR Gold Shares ETF (GLD) ticked up just 0.6% but the VanEck Gold Miners ETF (GDX) surged 14.9% higher.
Oil prices experienced heightened volatility in March, but ended the month higher than they were in February. As of March 28th, the WTI Daily Spot Price was $107.55/barrel, and Brent sat at $114.50/barrel.
Major cryptocurrencies posted solid moves to the upside in March. The price of Bitcoin was $47,063 as of March 31st, still 30.4% off its all-time high but about 25% higher than its value a month ago. Ethereum ended March at $3,384, representing a similar monthly gain of almost 25%. Cardano had its first winning month in quite a while, recovering from a max drawdown of 73.4% to close March at $1.19, representing a 32.8% monthly increase.
Have a great April! 📈
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