March Market Update 2016
March Market Update: March has been a positive month for the markets. In North America, we have seen markets with equities bounce back (S&P 500 +6.8% and TSX/S&P Composite +5.3%) and internationally rallying. The rebound was fuelled by the rising price of oil, strong economic data and a conservative outlook by the Federal Reserve.
The price of oil has continued its upward trend, passing $40 a barrel mid-month before closing the month at $38.34. Statistics Canada reported the economy grew 0.6% in January and the US economy showed signs of strengthening by adding 215,000 jobs.
In both Canada and the US, central banks maintained the target interest respectively at 0.50% and 0.25%. In its March meeting, the Federal Reserve expressed it is taking a cautious approach in increasing interest rates for the remainder of 2016. The Federal Reserve Chair, Janet Yellen stated, “Importantly, this forecast is not a plan set in stone that will be carried out regardless of economic developments…Instead, monetary policy will, as always, respond to the economy’s twists and turns so as to promote, as best as we can in an uncertain economic environment, the employment and inflation goals…”
The Bank of Canada noted that both inflation and growth were evolving in line with their forecasts, and highlighted that exports in non-energy areas of the economy had picked up.
REITs (Real Estate Investment Trusts) were up a healthy 6.5% in March due to the recovering price of oil, the low-interest rate environment, and strengthening loonie.
High yield bonds are currently an attractive investment opportunity because of the improving US economy, equity market rally, and the Federal Reserve not being in a hurry to increase interest rates. This opportunity was reflected when they picked up 4.4%.
Although March was a positive month across all asset classes and market volatility decreased we continue utilizing a healthy diversified strategy.
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