Rain Down On Me


Indisputably, the weather affects mood, and the mood amongst investors in April was gloomy and downbeat. Equities endured a tough start of quarter, with the S&P500 posting both its first monthly decline of 2024 and its first 5% pullback in 6 months. 10 of the 11 GICS sectors were in negative territory, with only utilities ending in the black. Fixed income markets also struggled, as treasury yields increased across the curve with the bellwether 10Y yield hovering at 6-month highs and poised to challenge the key 5% level. This weakness was the dual result of sticky inflation and a higher-for-longer narrative, which served to rain on rate cut expectations and put pressure on capital markets.

During the month, we saw a significant shift in market expectations regarding the probability and magnitude of interest rate cuts. Over the last several quarters, the market was confident that we would see at least 3-4 cuts this year, with interest rate futures pricing in as many as 6-7 back in January. Expectations have quickly changed, with the market now predicting just a single 0.25% cut this year, if any at all! This hawkish sentiment was fortified by nearly all Fed committee members, who affirmed that persistent inflation data have not provided the confidence needed to embark on an easing cycle. Accordingly, yields on treasury bonds rose sharply, with maturities from 2-30 years all increasing by at least 0.45% during the month. Dark and difficult times for bond investors, indeed.

Economic data took center stage in April, as both inflation and overall economic performance were key barometers. The pace of headline inflation surprised to the upside at +3.5% year-over-year, with notable price increases in sectors like shelter and services. US inflation has levelled out in the 3-4% range for the last nine months, calling into questions whether the Fed can really get price increases down to that critical 2% level. Despite strong payrolls and retail sales, Q1 GDP figures in April surprised to the downside, signaling lower growth in the economy. This combination – stubborn inflation and weaker economic growth – gave birth to a new narrative of the dreaded term “stagflation” which is commonly defined as a period of high prices and anemic growth.

Despite the morose and overcast environment, there were some glimmers of sunshine as we closed out the month. Earnings season has generally delivered the goods, exceeding expectations with higher-than-expected growth rates. Mega cap tech stocks, to include several of the darling “Magnificent 7,” reported robust earnings, underscoring that secular growth and the artificial intelligence themes are both alive and well. The economy continues to show resiliency and strength, particularly in the labor market with the unemployment and labor force participation rates trending in a positive direction.

Finally, we note that commodities were the only major asset class to enjoy gains in April. Lately we have written here about the strong performance of gold and other commodities, and that trend continued in spite of the market challenges mentioned above. Notable strength was seen in the industrial and precious metals sub-sectors, as strong demand supported prices. Gold tagged a new all-time high and continues to break out even further. All told, gold and the broader commodity complex bear watching as there is a “glass half full” attitude towards the asset class as the skies grow greyer and darker for traditional stocks and bonds. Perhaps the dawn is breaking on a new bull run for commodities.

We hope you have a wonderful month. May the skies clear and part for sunshine. The market’s mood – and our own – could use some light right about now. If we are lucky, by the next writing spring will have finally sprung. In the meantime, please reach out with any questions, and thanks as ever for your continued trust and support.


All indices are unmanaged, and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results.