March marked the end of a strong first quarter for financial assets as both stocks and bonds posted positive performance. Despite an ominous combination of regional banking stress, continued hawkish central bank policy moves, high inflation and recession risk, optimistic investor sentiment generally prevailed for the period. The S&P 500 Index finished the quarter up 7.48% after a 3.67% gain in March. Bonds also performed well, with the Bloomberg US Aggregate Bond Index up 2.96% for the quarter after returning 2.54% for the month. Commodities broadly fell 0.21% in March, as measured by the Bloomberg Commodity Index, and finished down 5.4% in the quarter, driven largely by falling energy prices. Meanwhile in the quarter, the Federal Open Market Committee (FOMC) maintained its hawkish stance to fight inflation, enacting hikes of 25 basis points (bps) to the target federal funds rate at its January and March meetings.
