About once a decade here in the Pacific Northwest, we encounter what’s been dubbed Snowmaggedon, where, as we witnessed in February, locals load up on groceries; city officials prep and treat roads, bridges and walkways; and families cozy up and stay close to home.
Financial markets have been breathtakingly strong so far in 2019. In fact, it’s been the best start for the US stock market since 1992, with the S&P 500 posting a 13.1% total return through mid-March. Another impressive stat is that the NASDAQ began the year with nine straight up weeks – a feat not seen since 1964. International stocks, corporate bonds, REITs, and midstream energy assets have also posted remarkable returns.
Over the last year, it has been a challenging environment for bond investors as interest rates continue to grind higher. Inflation readings registering multi-year highs are certainly one factor causing higher borrowing costs. However, perhaps the biggest influence on higher rates is the shifting supply and demand dynamic from fiscal and monetary policy changes. On the fiscal side, the tax overhaul, along with increased military and domestic spending, is expected to significantly widen our budget deficit, which means a surge in treasury borrowing.
