Global Market and Economic Perspective

Global Economic Commentary

• First quarter real economic growth in the U.S. came in at 2% which was slightly below expectations (and in line with the growth rate experienced over 2025). AI-related investment continues to underpin growth in the U.S. as well as several Asian economies. In Taiwan, most notably, GDP growth has surged and is likely to average 8% for 2025-2026. Growth came in above expectations at 5% for the quarter in China,while it remains around 1% across many major developed markets outside the U.S.
• Although inflation is above targets for all major developed markets, central banks made no changes to policy rates during the quarter. The Bank of Japan has been guiding expectations toward a continuation of its (slow) hiking cycle. All central banks are seeking to assess the magnitude and duration of increased inflation expectations stemming from the conflict in the Middle East that led to a spike in energy prices beginning in March.
• Unemployment during the fourth quarter remained just off recent lows in most developed countries, while continuing to push slightly lower in emerging markets economies. In the U.S., the employment situation remains characterized by limited turnover as job hiring remains tepid while job losses are also subdued.

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Global Equity and Currency Commentary

• Global equity market aggregate performance was negative during the first quarter, but with considerable dispersion. Within the U.S., large cap value stocks had slightly positive absolute performance and significantly outperformed large cap growth stocks (which were down 10% for the quarter). Small cap delivered positive absolute returns as well and outperformed both large cap value and growth.
• Both non-U.S. developed and emerging markets had positive local market results for the quarter. However, when coupled with the strong dollar in March, unhedged performance was slightly negative. Despite the strong dollar, both non-U.S. and emerging markets outperformed the U.S. for the quarter.
• Regionally, the divergence in performance outside the U.S. was broadly consistent with the spike in energy prices with export-oriented Latin America, Canada, and Australia outperforming import-oriented Europe and emerging Asia.

US Fixed Income and Fed Commentary

• In the fourth quarter, the upward-sloping Treasury yield curve flattened, as yields increased more for shorter-maturity than longer-maturity securities. The FOMC left rates unchanged during the quarter, as expected, while projections around the timing of future cuts was pushed out further.
• Credit spreads widened for the quarter but remain tight by historical standards across both investment grade and high yield debt markets. The combination of the increase in Treasury yields and credit spreads led to losses in investment-grade fixed income markets.
• Kevin Warsh will serve as the next Fed chair beginning in May and steps into an FOMC that has had a challenge most recently finding consensus. He has expressed a concern that the size of the Fed’s balance sheet remains too large even after its decline over the past several years.

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This material is based upon information that we believe to be reliable, but no representation is being made that it is accurate or complete, and it should not be relied upon as such. This material is based upon our assumptions, opinions and estimates as of the date the material was prepared. Changes to assumptions, opinions and estimates are subject to change without notice. Past performance is not indicative of future results, and no representation is being made that any returns indicated will be achieved. This material has been prepared for information purposes and does not constitute investment advice. This material does not take into account particular investment objectives or financial situations. Strategies and financial instruments described in this material may not be suitable for all investors. Readers should not act upon the information without seeking professional advice. This material is not a recommendation or an offer or solicitation for the purchase or sale of any security or other financial instrument.

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