This Weekly Market Update reviews the top market headlines: The Fed Initiates Liftoff on Rates, Multiple Interest Rates on the Rise, Chinese Officials Signal Supportive Efforts
  • The Federal Reserve raised the federal-funds target rate range to 0.25% to 0.50%
  • The average rate on a 30-year fixed mortgage hit 4.55% last week
  • The MSCI China index has fallen more than 30% over the last 12 months

Top Three Market Headlines

The Fed Initiates Liftoff on Rates: As widely expected, the Federal Reserve last week raised its target for short-term interest rates (the federal-funds rate) by 0.25%, putting the current target range at 0.25% to 0.50%. This marks the first Fed rate hike since 2018. While rates remain relatively low, Fed officials also signaled six more rate increases by the end of 2022, which would lift the target rate to nearly 2% by the end of 2022. The move comes in response to the Fed's battle with inflation and a tightening labor market. Most analysts are predicting another rate increase at the Fed's meeting in May, accompanied by a plan to begin shrinking its $9 trillion asset portfolio.

Multiple Interest Rates on the Rise: Amid persistently elevated inflation readings and the Federal Reserve's cessation of its zero-interest rate policy, various benchmark interest rates have been moving higher in recent weeks. The 2-Year Treasury note yield jumped from 1.30% on March 1 to 1.94% at the end of last week, while the 10-Year Treasury note yield rose from 1.71% to 2.15% over the same period, its highest level since mid-2019. Being closely tied to the 10-year Treasury note yield, the average 30-year fixed mortgage rate has spiked in 2022 from 3.27% to 4.55% as of last week, its highest point since the start of 2019, which could begin to dent the strength of the housing market.

Chinese Officials Signal Supportive Efforts: Government officials in China last week signaled an intention to adopt policies to boost the country's economy and reassure investors. The move comes as the MSCI China stock index has fallen more than 30% over the past 12 months. The country's top economic official, Vice Premier Liu He, suggested the government could shift its policy and ease punitive regulatory measures impacting internet and real estate property companies. The comments also heightened investors' hopes that the People's Bank of China will soon ease monetary policy.

As of March 21, 2022 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 5.76% -6.80% -6.80% 5.74%
S&P 500 6.19% -6.05% -6.05% 15.60%
Russell 2000 5.43% -6.86% -6.86% -7.04%
MSCI EAFE 5.60% -7.26% -7.26% -1.74%
MSCI Emerging Markets 3.50% -8.59% -8.59% -14.84%
FTSE NAREIT 2.56% -6.20% -6.20% 22.94%
Bloomberg Commodity -2.39% 24.47% 24.47% 47.59%
Barclays U.S. Aggregate -0.39% -5.16% -5.16% -3.08%

Bloomberg 3/16/2022, 3/17/2022, WSJ 3/14/22, WSJ 3/17/22 Data from Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.