Q1 2016 Market Commentary

April 9, 2016


After the worst start to a calendar year in history and an overall poor January and February, stock prices took off in March.  Without warning, prices rose during the month from 7-13% among the major investable equity classes.  This was after bear markets (declines of over 20%) in many assets like small US stocks and Emerging Markets.


Large US stocks as represented by the S&P 500 fell almost 10.5% during the period, only to recover completely by the end of the quarter.  That was the deepest first quarter slide ever with a complete reversal by the end of March.


Oil prices, which had fallen into the upper $20s per barrel recovered and now trade in the upper $30s.  Gold and other precious metals rebounded, assisted by a slight weakening in the US dollar. Commodities are traded in US dollars and often move in the opposite direction because of that.


10-year U. S. Treasury bonds rose in value as their interest rates fell below 2%.  Interest rates for 10-year bonds in Japan and Germany fell to close and below zero for some time during the quarter.  The Federal Reserve has delayed any short-term rate increases, and that news bolstered bond prices.  Also, the European Central Bank began to purchase corporate bonds in addition to government debt in their stimulus program. That pushed up prices and drove down yields on those bonds.


As you study the benchmark table below, you may notice for the first time in a long time the disparity of returns of the various asset classes.  For a while now, returns have been very similar among all the asset classes, and that is unusual.  It is much more common to see results like we now see looking back.  Looking forward, no one can predict how the table may look, but it is more likely than not that the lower performing assets and higher performing ones will trade places.






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