The latest Federal Reserve tightening cycle that began in 2022 has officially ended with the first cut to the benchmark Federal Funds in September. While the 50 basis point magnitude (rather than the standard 25 bp) surprised some, the cut had long been anticipated and largely priced in by the market. This will likely be the first cut in a series of cuts – the pace and magnitude of which will likely be endlessly debated. Even as the Fed chose to lead with a 50 bp move down in rates (on account of perceived softening), economic indicators like job growth and unemployment continue to indicate strength in the U.S. economy and the prospect for the oft mentioned (and admired) but seldom seen “soft landing”. Inflation and inflation expectations have also continued to trend in the right direction.
Hamlin equity accounts decreased 0.53% during the second quarter. The S&P 500 Index gained 4.28% driven by persistent hopes for a Federal Reserve interest rate cut, decent corporate earnings outlooks for the current quarter, and strong demand for large-capitalization Artificial Intelligence stocks. Hamlin bond accounts gained 1.86% during the quarter.
Hamlin’s equity composite advanced 8.45% over the first three months of 2024, trailing the S&P 500 Index’s 10.56% gain. Resilient Q4 2023 corporate earnings, expectations for a mid-year Federal Funds Rate reduction, and artificial intelligence euphoria combined to drive stocks higher. Hamlin bond accounts increased 2.33% as Treasury yields rose and the Bloomberg-Barclays High Yield Municipal Bond Index increased 1.51% over the quarter.*
*Q1 2024 performance is a preliminary estimate. ACA Performance Services has yet to examine performance which may be subject to change. Individual accounts vary.
Hamlin’s equity composite advanced 9.56% over the last three months of 2023, trailing the S&P 500 Index’s 11.69% gain. Decelerating inflation readings and the Federal Reserve’s pivot away from restrictive policy ignited powerful stock and bond market rallies. Hamlin bond accounts increased 4.91% as Treasury yields dove and the Bloomberg-Barclays High Yield Municipal Bond Index gained 9.21% over the quarter.*
*Q4 2023 performance is a preliminary estimate. ACA Performance Services has yet to examine performance which may be subject to change. Individual accounts vary.