As we entered March, all eyes were focused on the pending release of the “Mueller Report” as well as hopes for a major breakthrough in trade talks with China … not to mention the ongoing drama going on with the Brexit stalemate.  However, the big surprise, from the market’s point-of-view was what happened at the March Fed meeting.  All expectations seemed to be that the Fed would sort of continue with its wait-and-see approach with possible interest rate hikes later in the year after the pause in the cycle had allowed business to get through this slow-spell.  In all likelihood, or so it seemed, the Fed would be concerned that the very low level of unemployment combined with increasing wage growth would lead eventually to a return to its rate-hiking plan. 

Known Unknown.  We, of course, never know what is going to come out of the Fed’s monthly discussions in terms of monetary adjustments.  However, we have enough “Fed Watchers” that we have a reasonably high confidence in our expectations at times.  While the Fed had previously indicated expectations of two more rate hikes in 2019 and one in 2020, they now anticipate no rate hikes this year and only one next year.  Furthermore, they also indicated that they will stop shrinking their balance sheet, a process that became known as Quantitative Tightening, by the end of September this year.  Oops – the markets were surprised by the Fed!  Stocks got stronger, though ending mixed for the month while bonds absolutely soared!  Ten year treasury yields briefly traded as low as 2.35%!  I remain impressed by these amazingly low yields ten years into what is soon to become the longest expansion in history.

We will continue to keep an eye on the markets to see what moves it.  Please don’t hesitate to reach out if you have any questions or comments for us.