May 2019
Stock markets around the world continued their upward climb in April. An index of global equities, the MSCI ACWI, is up over 16% in the first four months of 2019. This is its best four-month start to a year ever (going back to its inception date in 1988). The story is the same for domestic stocks. Larger-cap U.S. stocks have surged 18% this year—also their best start in over 30 years. Fears about a global recession, further interest rate hikes, a hard Brexit, and a U.S.-China trade war seem like distant memories. The reversal in equity markets and investor sentiment from the end of 2018 has been remarkable.
U.S. stocks led foreign equity markets in April and growth continues its outperformance of value. Large-cap stocks gained 4% and small-cap stocks rose 3.4% for the month. Developed international stocks had gains of 2.8%, with Europe helping the cause with a 3.9% return. Emerging-market stocks were also positive in April, notching a 2.1% gain. All major equity asset classes are up double digits for the year.
Interest rates across the U.S. Treasury curve finished the month pretty much where they started. U.S. core investment-grade bonds were flat in April. Meanwhile, credit spreads continued to tighten after widening late last year. This led to continued price gains for the high-yield market in April, which is now up nearly 9% this year. Emerging market bonds issued in U.S. dollars have also performed well and are up over 7% in 2019.
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