Review and Outlook: Q1 2018
April 11, 2018
John Augustine, CFA, Chief Investment Officer
The Return of Volatility
Markets started the year with a powerful January. Investors were consistently buying stocks and selling bonds during the month. The return for the S&P 500 in January exceeded 5% for only the 13th time since WWII, and the yield on the 10-year Treasury note rose from 2.41% to 2.71%.
That all changed in February and March as the headlines focused on inflation, central banks, trade, politics and a slow start in the economy for the year. George Mokrzan, Randy Hare and Kirk Mentzer will have summaries of that activity in their reports later in this publication.
The passage of the tax bill in late December confirmed the optimism for the US economy that had been building consistently throughout 2017. Regardless of the current headlines around trade and technology companies, we suspect optimism will turn into action during 2018 with increased corporate investment and slowly building consumer spending as the year progresses.
What will get more interesting in markets as the year progresses will be the pace of the economy, the inflation it produces, and how the Federal Reserve will react to all of this.
Our goal in the Huntington Private Bank is to have the proper diversification for investor outcome intentions (growth, income or principal preservation) with respect to the accounts we manage. We are currently investing into the thesis of a growing US (and global) economy, with corporate profits improving noticeably and inflation slowly moving higher to levels more desired by the Federal Reserve.
Managing through the current volatility has been our focus this quarter, with our Strategy Team making several adjustments to portfolios where we have full authority and follow a stated direction of investment. We suspect the volatility could calm in the second quarter at some point, but we will remain diligent of the headlines and new fundamental information as it develops.
For more insights on The Economy, Fixed Income Markets and Equity Markets, please read the entire article.