2023 Q1 Quarterly Investment Report

An excerpt from our 2023 Q1 Quarterly Investment Report:

Notwithstanding the failure of three regional banks in the U.S. and of a global systemically important bank based in Switzerland, U.S. and non-U.S. equity markets ended the quarter with healthy gains. The equity market rally was fueled in part by speculation that March’s mini banking crisis would push the Fed and other major central banks to slow the pace of policy tightening (see Special Topic). Reflecting this expectation, U.S. tech stocks enjoyed particularly strong gains, although concerns over the profitability and soundness of the banking sector drove U.S. bank stocks sharply lower. In expectation of easier monetary policies ahead, global bond markets joined in the equity rally. Yields most sensitive to the policy tightening cycle fell especially sharply. The decline in U.S. yields contributed to the depreciation of the U.S. dollar against most major currencies.