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Latest Thoughts

Key Takeaways, First Quarter 2024

By Ralph Goldsticker, CFA | Apr 2024

Favorable economic news supported a continued rally in stocks. Treasury interest rates rose slightly. Investors’ focus remained on the Fed. The economy continued to show resilience, and corporate earnings were healthy. Inflation continued to trend down, albeit slower than the Fed hoped.

The Fed held rates steady at its meetings. It continues to state that bringing inflation under control remains its top priority, and the timing of future cuts will be data-driven. Their comments and the dot plot suggest there will be two or three rate cuts in 2024. By contrast, after the Q4 bond rally, the year-end forward curve suggested an expectation of up to six cuts in 2024.

The consensus continues to be that the economy will achieve a “soft landing.” While inflation continues to be a bit above the Fed’s target, its trend is in the right direction, and fears of persistent high inflation have disappeared. 



  • US and international stocks gained ground. The broad US market gained 10%, and small caps 5%. Developed international stocks rose 6%, and emerging markets 2%. 

  • The broad US stock market was up 29% for the last 12 months. Lacking the Magnificent 7, small caps were up only 20%. The US stock market is up 70% since year-end 2019 (pre-pandemic),
    13% annualized. 

  • Growth stocks modestly outperformed Value (11.4% vs 9.1%). Growth also outperformed for all trailing periods: 19%
    for the last 12 months (39% vs 20%), 8% per annum for the last
    5 years (18.5% vs 10.3%), and 7% per annum for the last 10
    (16% vs 9%). Since the start of the pandemic (year-end 2019), Growth outperformed Value by 55% (8.5% per annum).

  • Due to weaker economic news overseas, international stocks lagged the US. Developed international stocks were up 5.8% and up 15.4% for the last 12 months. Hurt by performance of China, emerging markets were up only 2.4%.

Fixed Income


  • Core Bonds and Treasuries declined as investors lowered their expectations from six to three rate cuts this year. Positive economic news resulted in credit spreads tightening.

  • The target Fed Funds range remains at 5.25% to 5.50%, unchanged since the July 2023 meeting.

  • 3-month T-bills finished the quarter yielding 5.46%, up 6 bps, and up 61 bps for the last 12 months. 

  • 10-Year Treasuries were yielding 4.20%, up 32 bps for the quarter, and 72 bps for the last 12 months. The yield is still down 68 bps from the March 2023 high. 

  • Investment Grade (IG) bond spreads narrowed by 8 bps to 85 bps. High Yield by 24 bps to 2.99%. IG spreads are 5 bps narrower than year-end 2019, and High Yield 37 bps narrower.

  • The real yield of 5-year TIPS rose to 1.83%, up 11 bps, the real yield on 10-year TIPS rose 15 bps. Both suggest that inflation will decline slower than previous expected.

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