March market review

April 9, 2014

Shortly after the end of each month, our Chief Investment Strategist provides highlights of the market and our funds’ performance. Following is a summarized review of March — 


  • Global financial markets posted mixed performance as US equities pulled back from record valuation levels on continued “tapering” of stimulus by the Federal Reserve. Tapering is the gradual reduction of the amount of assets the Fed is purchasing each month under its quantitative easing program.
  • The S&P 500 returned 0.84% for March and 1.81% for 1Q14. The Dow Jones Industrials Average Index was the worst performing US equity index for Q1, up 0.83% for March but down -0.72% for Q1. The Russell 2000 small cap index was down – 0.68% for March, but up 1.12% for Q1.
  • The Developed International equity index, MSCI EAFE, was down -0.64% for the month but up 0.66% for Q1.
  • Emerging markets (MSCI EM) ended the month of March up 3.07%, but was still down -0.43% for Q1.
  • The Japanese Nikkei 225 was down -0.09% in March and -9.20% for Q1. This underperformance was accompanied by a rise in the Yen.
  • Government bond yields were mixed across the curve. In March, the 10-year Treasury yield was up 7bps at 2.72% up from 2.65% in February and the 30-year Treasury yield was down 2bps to 3.56% from 3.58% in February. The Federal Reserve again left the overnight lending rate unchanged at 0-0.25%.
  • Corporate bond prices were mixed. The Barclays Aggregate Index was down –0.17% for the month but up 1.84% for Q1. The Credit Suisse Leveraged Loans Index (bank loans) was up 0.37% for March and 1.30% for Q1.

Economic & Geopolitical Headlines

  • The dominant story in March from an economic and geopolitical standpoint was the annexation of Crimea by Russia and the ensuing military and diplomatic tensions relating to this issue. Many are fearful that this is a first step by Russia towards full annexation of Ukraine; US and European politicians are being tested by the ongoing issue.
  • The ISM manufacturing index had a 0.5 increase in March; US PMI was at 53.7, up from 53.2 in February. Global PMI numbers show that manufacturing continues to strengthen throughout the world. A reading above 50 is considered economic expansion.
  • Janet Yellen had her first press conference as Chair of the Federal Reserve. The Fed has continued the process of “tapering”. However, her language in the press conference and in subsequent speeches has leaned more “dovish” implying a potential for continued stimulus in the future.
  • The US economy added 192,000 jobs in March, an improvement over previous months when winter storms and extreme cold cut into hiring, and a potential sign that US labor markets may be gaining momentum. The number of unemployed persons was essentially unchanged, and the unemployment rate held at 6.7%. During the first quarter, the number of unemployed persons and the jobless rate were down by 1.2 million and 0.8 percentage points, respectively.
  • GDP growth estimates showed that the economy increased at an annual rate of 2.6% for the fourth quarter of 2013, up from the prior estimate of 2.4%. Most economists were encouraged with this figure, especially considering the headwind of the Federal Government shutdown at the beginning of the quarter.
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