Your Capital Markets Snapshot: Fed Holds Rates as Markets Shift

Last week, the Federal Reserve decided to keep the federal funds rate unchanged, reflecting a cautious approach amid slowing economic growth and policy uncertainty. Notable observations from the Fed’s meeting include their expectations for slowing GDP growth and higher inflation in the short-term plus plans to slow its balance sheet reduction program in April. By week’s end, U.S. stocks experienced a slight recovery from correction territory but remain down year-to-date. International stocks, particularly in Europe and China, continue to deliver impressive performance to start the year. In the U.S. fixed income markets, bond yields declined, leading to higher bond prices and solid returns. So far this year, investment-grade bonds and emerging-market debt are performing particularly well. The U.S. economy showed signs of cooling from its above-trend pace, but the labor market remained healthy, and manufacturing sectors indicated a recovery.