Investors went into the first quarter optimistic that a soft landing was in store for the economy, therefore avoiding a recession, with inflation continuing continue to improve. With the US economy growing more than expected during the 4Q23 and most central banks already looking at the first rate cut, global equities posted strong returns. However, as prospects for aggressive rate cuts faded, it was a more challenging quarter for fixed income. Investors previously priced in five cuts in 2024, but expectations now center on three at best. In fact, yields across almost all asset classes slightly increased, with some credit tranches recording loses over the quarter, specifically through sovereign bonds. Developed market equities had a stronger quarter thanks in large part to the growth stocks, especially true in the S&P 500, outperforming most of its peers, driven once again by the magnificent seven stocks.
