April Angst

Monthly Market Snapshot: April 30, 2022

Highlights

April was a rough month for investors. Investors appear increasingly worried that the U.S. economy may be headed towards an environment of stubbornly high inflation and low economic growth. Our base case remains that the U.S. economy will avoid a “hard landing,” but we may need to see a cooling of inflation data and a stabilizing in bond yields before investor sentiment begins to improve. In the month of April, global equities tumbled with the MSCI AC World Index off 8.1%. Technology shares, which have been extremely sensitive to raising rates, plunged with the NASDAQ shedding 13.3% as the real 10-year U.S. Treasury yield leapt into positive territory. The bond market also experienced broad losses with the Citi’s World Broad Investment Grade Index falling 3.3%.

Our global equity overweight is largely in commodity hedges like natural resources, oil field services, and other defensive equities. Away from commodities, Citi Global Wealth Investments’ (CGWI) Global Investment Committee prefers companies with a solid track record of earnings and dividend growth (like consumer staples). We also believe that investors may wish to consider adding long-duration Treasuries (such as the 30-year U.S. Treasury) with yields likely to peak in 2022. We think that this type of defensive portfolio tilt has potential in the current environment.