April 2024 Commentary: Policy Tug of War

Summary

• In April, rising bond yields and increased geopolitical tensions pressured the stock market, and U.S. large cap stocks declined 4.1% while small cap stocks ended the month down 7.0%.
• Preliminary estimates show the U.S. economy grew by 1.6% in the first quarter, the slowest pace in nearly two years. With three consecutive warmer-than-expected CPI prints, inflation remains well above 2%, and market expectations for rate cuts are fading.
• A policy tension has emerged between the U.S. Department of Treasury, which is pushing for robust economic growth, and the Federal Reserve, which should be prioritizing their 2% inflation goal.
• The tug-of-war between these two groups will cause opportunities and risks to ebb and flow, but it remains critical that inflation and interest rates stay contained to support the economy and markets.

Read and download the commentary here.