Global stocks and bonds declined in a quarter defined by soaring inflation, surging oil prices, central bank tightening, and a war in Ukraine. Despite a march rally, stocks were unable to overcome losses in January and February. While bonds logged their worst quarterly decline since 1980. For the quarter, U.S. large-cap stocks were down (4.6%) and small-cap stocks lost (7.53%). U.S. value stocks were down but significantly outperformed growth stocks at (0.74%) compared to (9.04)%. Foreign developed stocks lost (5.91%) for the quarter while emerging stocks were down (6.92%). Core U.S. bonds suffered large losses and were down (5.93%) for the quarter as the Fed began raising interest rates and inflation heated up. Inflation-sensitive bonds were down roughly (3%) and high-yield bonds lost (4.84%). In general, lower duration bonds outperformed high duration bonds in a rising interest rate environment.  

In this quarter's commentary, we explore the following topics:

• How to Read Yield Curve Signals: we discuss how the yield curve (YC) and the signals the YC can provide about the economy and financial markets.  We highlight the implications an inverted yield curve can provide about recessions and stock market performance.
• Visit Our Blog: we highlight some of our recent blog posts on our website at www.accreditedwm.com/blog:
  • Looking to History for Clues- we review historical studies of which asset classes and stock sectors perform well in inflationary periods.
  • Thoughts on the Tragedy in Ukraine- we share our thoughts on the Ukraine war and historical studies of financial market performance during wars.
  • Commodity Price Shocks and Recession Risk- we highlight the impact of previous commodity price shocks and the potential for a recession.

   
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