The post-election rally continued in April. The S&P 500 increased 1.03% for the month, while small cap stocks, as measured by the Russell 2000, increased 1.10%. Similar to activity last month, growth stocks’ return of 2.25% easily surpassed the 0.14% decline of value stocks. International stocks continued their recent leadership with developed international stocks increasing by 2.62% and emerging market stocks increasing by 2.21%.

Fixed income markets increased in value in April as interest rates declined over much of the yield curve and credit conditions continued to improve. Rates moved up during the month for bonds with shorter maturities (two years and less) but decreased for bonds with longer maturities. As a result, the yield curve flattened during the month. The yield on the benchmark 10-year Treasury decreased 11 basis points to 2.29% during the month. The Fed meets again the first week in May and, although no rate increase is expected, the meeting could influence the bond market. The Bloomberg Barclays Aggregate Bond Index increased by 0.77% for the month. Credit once again outperformed with high yield bonds increasing 1.15%, investment grade bonds gaining 1.07% and Treasuries rising 0.69%. Municipals continued their recovery, increasing by 0.73% during the month.


In many ways, April was a photocopy of March. U.S. stocks, as measured by the S&P 500, again posted gains and have now risen in every month since the election in November. Growth stocks dominated value stocks for the month of April, while there was little difference between large and small cap stocks. Developed international and emerging market stocks generated solid returns and outperformed domestic stocks.


The yield curve flattened during April as yields rose for maturities of less than two years and decreased for longer dated maturities. The yield on the 10-year Treasury decreased 11 basis points in April to 2.29%. The Bloomberg Barclays Aggregate Bond Index, Treasuries, investment grade corporates, high yield bonds, and municipal bonds all gained in value for the month. Corporate bonds outperformed Treasuries during the month.


The economy slowed a bit in March. New jobs creation slowed to its lowest level since May 2016. Both ISM surveys declined a bit from February, as did durable goods orders and housing starts. On a positive note, existing home sales hit the highest level since February 2007 and new home sales hit the highest level since last summer. Economic output disappointed at only a 1% annualized rate for the first quarter, which ended March 31. The Federal Open Market Committee meets May 2 to 3 and no increase in rates is expected. The outcome of elections in France lowered the risk of a Brexit-like event there. In the U. S., the president’s long awaited tax reform plan was unveiled and, as expected, called for fewer brackets with lower rates for individuals and for lower rates for corporations. Now the fun begins, as elected officials begin to battle over the details, and it remains to be seen what, if anything, gets passed.

Event Period Estimate Actual Prior Revised
Nonfarm Payroll Mar 180,000 98,000 235,000 219,000
Unemployment Mar 4.70% 4.50% 4.70%
ISM Manufacturing Mar 57.2 57.2 57.7
ISM Non-Manufacturing Mar 57 55.2 57.6
Retail Sales ex Auto & Gas Mar 0.30% 0.10% 0.20% 0.10%
PPI MOM Mar 0.00% -0.10% 0.30%
PPI MOM ex Food & Energy Mar 0.20% 0.00% 0.30%
PPI YOY Mar 2.40% 2.30% 2.20%
PPI YOY ex Food & Energy Mar 1.80% 1.60% 1.50%
CPI MOM Mar 0.00% -0.30% 0.10%
CPI MOM ex Food & Energy Mar 0.20% -0.10% 0.20%
CPI YOY Mar 2.60% 2.40% 2.70%
CPI YOY ex Food & Energy Mar 2.30% 2.00% 2.20%
Industrial Production Mar 0.50% 0.50% 0.00% 0.10%
Housing Starts Mar 1,250,000 1,215,000 1,288,000 1,303,000
Building Permits Mar 1,250,000 1,260,000 1,213,000 1,216,000
New Home Sales Mar 584,000 621,000 592,000 587,000
Existing Home Sales Mar 5,600,000 5,710,000 5,480,000 5,470,000
Leading Index Mar 0.20% 0.40% 0.60% 0.50%
Durable Goods Orders Mar (P) 1.30% 0.70% 1.80% 2.30%
S&P CoreLogic CS 20-City YOY Feb 5.78% 5.85% 5.73% 5.66%
Personal Income Mar 0.30% 0.20% 0.40% 0.30%
Personal Spending Mar 0.20% 0.00% 0.10% 0.00%
GDP Annualized QOQ 1Q (A) 1.00% 0.70% 2.10%
Univ. of Mich. Sentiment Apr (F) 98 97 98
P = Preliminary, A = Advance, F = Final
Source: Bloomberg

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