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Market Commentary - April 2023

For your convenience, below are a few summary highlights from our Investment Strategy Group’s Quarterly Market Commentary for April 2023:

  1. Global equity markets closed out a positive quarter, as investors were buoyed by cooling inflation data and a growing sentiment that central banks could pause rate hikes later in the year. In the U.S., the S&P 500 rose 7.5% in the first quarter. Asian and European markets were stronger during the period, with similar signs of a peak in inflation.
  2. To continue to combat inflation, the Federal Reserve maintained its hawkish policy with a 25-bps interest rate hike in March, bringing the Federal Funds target rate to 4.75-5.00%. Future Fed rate hikes have mainly become data dependent due to banking stress and slowing credit growth.
  3. Economic data remains relatively stable in the U.S., with positive real GDP growth and continued strength in the labor market. Unemployment came in at 3.5%, as 236,000 jobs were added in March. While wage growth remains strong, it did moderate to 4.2% from a peak of 5.6% last March and 4.6% in January. Further moderation is key to bringing inflation back to the Fed’s 2% target.
  4. Inflation has finally started to trend lower on a sustained basis. The Consumer Price Index (CPI) softened to 5.0% to end the quarter, after reaching a 40-year high of 9.1% in June 2022. Core prices, excluding more volatile food and energy categories, were up to 5.6% in March. While goods inflation begin abating last summer, trends in services inflation are now normalizing as well.