Global equities gained 1.5% last week.  U.S. stocks rose 1.4% while developed international and emerging market stocks added 1.6% and 2.2%, respectively.  Year-to-date, global equities are up 3.6% with domestics (+3.5%), developed international (+4.3%) and emerging markets (+2.0%).  Bonds rose 0.5% for the week, up 2.8% year-to-date.  The U.S. 10-yr Treasury yield fell 5 bps to 3.38%.

The S&P 500 moved higher for the second week in a row adding 1.4% in volatile trading as a U.S. Federal Reserve meeting and ongoing concerns about bank stability dominated markets.  U.S. Treasury yields fell for the third week in a row, pushing bond prices higher amid shifting interest-rate expectations.  The 10-yr Treasury yield closed the week at 3.38%, down from a recent peak of 4.07% on March 2.  On Wednesday, the Federal Reserve moved to raise interest rates by 0.25% to a range of 4.75%-5.00% and maintained projections for a year-end top rate of 5.25% – implying one additional 0.25% increase this year.  Market expectations remain lower than Fed projections, pricing in a high point of 4.75%-5.00% followed by 75 bps of cuts beginning later this year.  Chair Powell stated that the U.S. banking system is “sound and resilient” noting that recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation.  As in the United States, central banks in the United Kingdom, Switzerland, and Norway all lifted interest rates in the latest week.

The week ahead brings a reading of the Federal Reserves preferred inflation gauge.  The Personal Consumption Expenditures (PCE) price index, due out Friday (3/31) will show whether a January uptick (+0.6% MoM) extended into February.  Consensus expectations call for a monthly increase of 0.4%.

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