A Momentous March

Monthly Market Snapshot: March 31, 2022

Highlights

The actions taken in March 2022 may have lasting consequences with the Federal Reserve embarking on a new tightening cycle and the ongoing conflict between Russia and Ukraine likely to shift global supply chains. Nevertheless, global equities marched higher with the MSCI AC World Index rising 1.9%. U.S. stocks performed particularly well with the S&P 500 and NASDAQ climbing 3.6% and 3.4%, respectively. While still down year-to-date, falling crude oil prices have helped stocks to the stage an impressive rally over the last couple of weeks. Outside of the U.S., stocks were mostly lower with European stocks dropping 1.5% while Japanese stocks dipped 1.4%.

U.S. Treasuries experienced a sharp sell-off as investors responded to hawkish comments from the Federal Reserve. This was felt acutely in the 2-year U.S. Treasury yield which surged from 1.43% to 2.33% and briefly topped the 10-year U.S. Treasury yield – often referred to as an inversion of the yield curve. While an inversion of the yield curve can be a predictor of a U.S. recession, one does not appear imminent.

In early March, Citi’s Global Investment Committee (GIC) decided to add a 4% portfolio weighting to global natural resources as a defensive hedge. We also reinstated a 2.0% overweight to gold. These additions were largely funded by a reduction in the allocation to both European and Japanese stocks.