This Weekly Financial Markets Update reviews the top market headlines: U.S. GDP Growth Cools in Q1, More Evidence of Stubborn Inflatoin, Treasury Bond Yields Hit New 2024 Highs

Top Three Market Headlines

U.S. GDP Growth Cools in Q1: The Bureau of Economic Analysis reported last week that real (inflation-adjusted) U.S. gross domestic product (GDP), a measure of all goods and services produced, grew in the calendar quarter ended March 31, 2024 at an annualized rate of 1.6%. This lagged economists' projection of 2.4% and was down from a 3.4% pace in Q4 of 2023. Categories driving growth in Q1 included residential and nonresidential fixed investment and consumer spending on services (health care, financial services, insurance). Offsets included a material downshift in government spending and a decrease in business inventories.

More Evidence of Stubborn Inflation: The latest reading of the Personal Consumption Expenditures (PCE) price index, released last week by The Bureau of Economic Analysis, showed that prices for consumer goods and services on a "core" basis (excluding food and energy) increased 2.8% year-over-year in March, unchanged from February's pace. Through the first quarter 2024, the measure, reported to be the Federal Reserve's preferred inflation gauge, rose at an annualized pace of 4.4%. The release reinforced the trend depicted by the Consumer Price Index, issued separately by the Department of Labor, of inflation stalling at a pace above the Fed's 2% target.

Treasury Bond Yields Hit New 2024 Highs: Yields on benchmark U.S. Treasury bonds of various maturities hit new year-to-date highs last week, extending the trend of rising yields in 2024. The 2-year Treasury note yield settled on Friday just shy of 5.0% and the bellwether 10-year Treasury yield briefly topped 4.7% during the week, while further out the yield curve the 30-year Treasury yield ended the week at 4.8%. All three have increased more than three-quarters of a percentage point in 2024 as investors have reassessed expectations for Federal Reserve rate cuts amid higher-than-expected inflation readings.

As of April 29, 2024 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 2.62% -2.58% 5.40% 20.63%
S&P 500 2.68% -2.87% 7.38% 27.71%
Russell 2000 2.80% -5.72% -0.84% 17.50%
MSCI EAFE 1.92% -2.85% 2.77% 9.45%
MSCI Emerging Markets 3.77% -0.01% 2.36% 10.52%
FTSE NAREIT Equity 1.38% -6.46% -6.46% 6.22%
Bloomberg Commodity -0.03% 3.89% 6.17% 4.98%%
Barclays U.S. Aggregate -0.08% -2.43% -3.19% -1.25%