We hope this quarterly update finds you and your family well and in good health. There is a real sense of optimism as we emerge from pandemic fears and head into the spring and summer months. As we look back at the first quarter and forward to the rest of the year, we can identify three compelling themes.
COVID-19 and vaccine rollout - The pandemic continues to be at the forefront, but vaccinations are expected to bring the virus largely under control over the next few months. The spread of more contagious variants remains a risk, as does vaccine uptake.
Monetary and fiscal policies - The stimulus from the American Rescue Act combined with the Federal Reserve’s commitment to low interest rates contribute to positive economic data. Jobs were added and consumer confidence has improved. The Biden administration’s infrastructure deal has been proposed, but will face an uphill battle for approval.
Inflation fears - Expectations of a rapid economic expansion often raise the specter of runaway inflation. Healthy economies tend to have gentle price increases, which give businesses room to raise wages and leave the central bank with more room to cut interest rates during times of trouble. However, actual evidence of renewed inflation remains paltry.
As a whole we remain cautiously optimistic about continued growth in the global economy.
The S&P gained 6.18% for the quarter and the MSCI EAFE Index increased by 3.48%. Fixed income results were disappointing as long-term rates rose throughout the quarter. The Bloomberg Barclays U.S. Aggregate Bond Index fell by 3.37% for the quarter.
