The first quarter of 2019 started strong for both the stock and bond markets.  Large cap U.S. stocks, measured by the S&P 500 index, were up 13.6% for the quarter, offsetting much of their decline in the previous quarter, while small cap stocks, measured by the Russell 2000, rose 14.6% for the quarter.  Foreign stocks again trailed the US indexes – the FTSE Developed all cap ex-US index (Europe, UK, Australia and Japan) finished up 10.2% and emerging markets (China, Taiwan, Brazil among others) were up 11.3% for the quarter.  Interest rates continued to fall in the first quarter of 2019; the 10-year treasury started the quarter yielding 2.69% and finished the quarter with a 2.41% yield.  The Barclays U.S. Aggregate Bond Index was up 3.0% for the quarter as interest rates moved lower late in March.

At the end of the quarter, he Ten-Year Treasury rate yield was less than the Three-Month Treasury rate – an “inversion” of the yield curve.  In the past, this has been an indicator that the economy is slowing.  Investors will be closely watching corporate earnings and economic data to gauge the strength of the economy.

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