The FCMS Investment Committee is pleased to share the latest insights on the current financial market and economic developments.

Market Perspectives

Here are the top things from our FCMS Investment Committee on current financial markets and economic developments:

1. 1. The 10-Year U.S. Treasury Gets a Push While Global Stocks Fall

      Upside surprises to CPI and PPI pushed the 10-year U.S. Treasury yield up 23 bps, its largest weekly increase since last October. Global stocks fell in a choppy tape; domestic small caps underperformed due to their sensitivity to interest rates. However, the underperformance of the NASDAQ 100 and Japan points to an unwind of recent winners. Confounding the weekly narrative is the underperformance of the average S&P 500 stock versus the cap-weighted index amidst the leadership of two highly cyclical sectors, energy and materials. Optimism around China, which drove outperformance in the country’s equity markets, likely contributed to the outperformance of cyclicals. As a whole, however, last week’s price action lacked a neat narrative, with a lack of cogency likely exacerbated by Friday’s large quarterly option expiration in markets.

   2. Monetary Policy Remains In Focus

      Monetary policy is in focus this week as 15 central banks meet, including the Bank of Japan (BOJ) on Tuesday and the Fed on Wednesday. The BOJ elected to raise interest rates for the first time since 2007, ending 8 years of negative rates. At the Fed, this week’s meeting left little changed from the “wait and see” policy stance we have been under for the past month.

   3. The Fed’s FOMC Meeting Takes Center Stage and New Projections Shared

      The Fed’s March FOMC meeting was the most important macro event of the week. An updated summary of economic projections included minor revisions to the Fed’s “dot plot” of interest rate projections; as Fed officials projected three cuts for this year, down from four in December (June is currently priced at 50/50 odds for a rate cut in the market). We get three more CPIs that could change the picture by then. NVIDIA CEO Jensen Huang’s speech and presentation at the company’s annual GTC conference did little to shift its stock price but reinforced the broader AI theme.

What Happened Last Week?

Here is a recap of the top things that happened last week:

• Last week’s price action was choppy and lacked a cogent narrative.
• 10-year U.S. Treasury yields rose by their most since last October on consumer and producer inflation upside surprises.
• Chinese equities led globally as cyclicals (energy and materials) led U.S. markets; interest-rate sensitive small caps underperformed, as did megacap tech.

What We’re Watching This Week

Here is a recap of what we’re watching for this week:

• The Fed’s March policy meeting took center stage this week – as investors digested updates to the dot plot.
• A major catalyst for the AI theme was this week’s GTC conference by NVIDIA; NVIDIA CEO Jensen Huang presented on Tuesday.
• The Bank of Japan (BOJ), which took rates out of negative territory, and the Chinese central bank add to the global monetary policy backdrop.

To receive weekly updates from the FCMS Investment Committee, please subscribe to our blog and follow us on our social media channels for the latest information.

To learn more about FCMS Investment Management, click here.

Securities and Investment Advisory Services offered through Founders Financial Securities, LLC (FFS). Member FINRA, SIPC and Registered Investment Advisor. The commentary in this report is not a complete analysis of every material fact in respect to any company, industry, or security. This material contains the opinions of the author(s) but not necessarily those of FFS, and such opinions are subject to change without notice. This material has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and do not constitute a solicitation to buy or sell any security or product and may not be relied upon in connection with the purchase or sale of any security or device. Index information is intended to be indicative of broad market conditions. The performance of an unmanaged index is not indicative of the performance of any particular investment. Individuals cannot invest directly in any index. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed. Investors should consult their financial, tax, and legal advisors before making investment decisions. Past performance does not guarantee future results. Materials above are produced by Horizon Investments, LLC, which is not affiliated with FFS. © 2022 Horizon Investments, LLC.