The risky asset was the safe asset for March as fixed income offered no protection from an inflationary and war environment, yet the rally in the second half of March may not continue if fears of a recession rise. Earnings have been robust and are extrapolated to continue, but the impact of an energy shock, less fiscal stimulus and general inflation will take toll on markets.
Duration risk is evident in most fixed income ETFs. Credit markets are suffering from duration and spread risk. The Fed tightening is spilling over to the international markets. The negative rates of yesterday are offering no cushion against higher global inflation.
The energy sector was outstanding for the first quarter; however, several sectors provided positive returns for March.
The commodity countries, Australia, Canada, and Brazil, prove to be strong places of value. The improved terms of trade and strong current accounts made these countries good places to store value.
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