Global Perspectives

The last few weeks have given us a slew of U.S. economic data. 1Q24 GDP increased just 1.6% (versus an expected 2.5%), while March CPI came in hot at 0.4% MoM (expected 0.3%) and 3.5% YoY (expected 3.4%).

In line inflation and slower growth renewed expectations for one to two rate cuts this year.

A slew of economic data released last week has investors considering the potential effects of slower growth and persistent inflation.

Investors have been preparing for potential rate cuts by the Federal Reserve and other major central banks by buying up investment grade (IG) and high-yield (HY) credit to lock in elevated yields.

External forces drove markets and led to higher volatility across commodities and equities.

Back in January, Blackstone said that real estate values were bottoming and that they expected deal activity to pick up in 2024. True to its word, Blackstone recently announced a $10 billion deal to take Apartment Income REIT (NYSE: AIRC) private. In addition, Blackstone Real Estate Income Trust (or BREIT) saw its share buyback request decline for March—down 17% from February and a whopping 85% from a year earlier, although redemption levels remain elevated.

Favorable economic conditions and strong earnings momentum could underpin a broadening rally and continued strength in U.S. equities.

Federal Reserve Chair Jerome Powell spoke at a forum in Washington this week, cautioning that persistent inflation and a strong U.S. economy will likely delay any Fed rate cuts until later this year.

The story of the fixed income markets over the past six months is broadly one of spreads tightening across the board as funds flow back into bonds.

Both U.S. equities and bonds fell on hot inflation, but late in the week, bonds recovered somewhat as geopolitical tensions heightened.