Treasury yields jump
Bond yields moved up in the 1st quarter as inflation continued to rise. The Fed, which bumped up rates 0.25% in March, is expected to make additional rate hikes throughout the year to combat rising inflation. The yield on 10-year U.S. Treasuries rose 0.81% in the 1st quarter, from 1.51% at the end of 2021 to 2.32% at the March close.
Corporate earnings still climbing
Corporate earnings expectations continued to rise in the 1st quarter as the economy recovered. The 12-month advanced earnings per aggregate share projection for S&P 500 companies climbed 4.28% in the 1st quarter.
Forward P/E ratio declines
The forward price-earnings ratio (P/E) of the S&P 500 declined slightly in the 1st quarter, as earnings projections rose, and stock prices slipped. The forward P/E of the S&P 500 dropped from 20.96 at the close of 2021 to 19.79 at the end of the 1st quarter.
Dollar gains vs Euro and Yen
The dollar appreciated 2.16% versus the Euro in the 1st quarter. The rising dollar has been attributed, in part, to the relatively quick economic recovery that the U.S. has made from the pandemic. In addition, concerns over the impact of the Ukrainian war—and the Russian sanctions that have accompanied it—has also affected the strength of the Euro. The dollar has also appreciated versus the Yen, up 5.40% in the 1st quarter.
Oil price surge abating
While rising global demand was already driving oil prices higher as the world recovered from Covid-19, the boycott of Russian oil in response to the Ukraine attack pushed prices even higher. West Texas Intermediate, a grade of crude oil used as a benchmark in oil pricing, surged to more than $123 per barrel in early March before slipping back down to about $100 at the end of March.
The drop in prices was due, in part, to President Biden’s commitment to release one million barrels of oil a day from U.S. oil reserves—the largest release ever of the nation’s oil reserves. Through the 1st quarter, oil prices rose 33.33%, from $75.21 per barrel at the end of 2021 to $100.28 at the close of the quarter, including a 4.76% increase in March.
Gasoline prices at the pump jumped 28.68% in the 1st quarter, from a national average of $3.38 per gallon at the end of 2021 to $4.34 at the March close.
Gold prices rise
With inflation rising and the war in Ukraine intensifying, gold prices moved up 6.18% in the 1st quarter, from $ $1,828.60 per ounce at the end of 2021 to $1,941.30 at the March close.
International equities level off
International equities made a very slight recovery in March, with the MSCI EAFE Index gaining 0.12% for the month. But for the quarter, with the Ukrainian crisis taking center stage, the index dropped 6.61% from 2,336.07 at the end 2021 to 2,181.63 at the March close. (The MSCI EAFE Index tracks developed-economy stocks in Europe, Asia, and Australia.)