Q1 2023 Quarterly Market Commentary

Strong, but Volatile, Start to 2023

First quarter economic data indicate the U.S. economy entered 2023 with considerable momentum, despite the Federal Reserve’s interest rate hikes throughout 2022. Fourth quarter 2022 GDP data showed the U.S. economy grew at a 2.6% rate.* In our view, this growth was largely driven by a resilient consumer, inventory replenishing, and increased government spending. This helped offset reduced business spending and a weakening housing market. Additionally, jobs remain plentiful with job openings significantly above pre-pandemic levels, inflation may have shown some signs of leveling off, and consumer spending remained strong. In the face of higher interest rates, the economy remained resilient.

Financial markets experienced increased volatility during the month of March due to many factors including regional bank sector activity. The U.S. Treasury bond market participated in this volatility as investors debated whether the Federal Reserve would continue to raise interest rates or hold at current levels. Indeed, the yield on the 10-year treasury bond reached a 2023 high of 4.07% in early March, only to decline as low as 3.38% three weeks later. This quarter’s commentary discusses the recent banking activity, including concerns about financial stability, and provides an update on year-to-date stock and bond returns.


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Important Disclosures: The report herein is not a complete analysis of every material fact in respect to any company, industry or security. The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. Any market prices are only indications of market values and are subject to change. The information contained herein is based on technical and/or fundamental market analysis and may be based on data obtained from recognizable statistical services, issuer reports or communications or other sources believed to be reliable. However, such information has not been verified by us, and we do not make any representations as to its accuracy or completeness. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request. CAR-0423-01080

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