U.S. stocks saw its longest run of quarterly gains since 1998 end yesterday as the market closed marginally lower. The S&P 500 (-0.88%) and Dow (-1.11%) both closed more or less at their lows for the session following some mixed macro data and a decline in oil markets. The stock market has been the benefactor of an economic recovery which is proving to be resilient. The next bone of contention in the US is when the Federal Reserve will actually raise interest rates for the first time. Possible subsequent effects are a stronger dollar, an increase in treasury yields and lower commodity prices.

The value of global stocks climbed to a record last quarter as the Federal Reserve cut its outlook for interest rates and central banks from Europe to Asia boosted stimulus. China’s official factory gauge unexpectedly signalled expansion in March.

Oil Price under Pressure

The price of oil has been under pressure, WTI Crude down a further 0.71% to USD 47.27 as of this writing following news that negotiators have reached consensus on the main points of a nuclear accord with Iran. The price of oil remains particularly volatile at the moment following the large sell off witnessed over the past couple of months.

Emerging Market Issuance Boom

A side effect of the ECB’s stimulus programme which has seen the second-busiest quarter in a decade for sales in euros has also lead to an emerging-market bond rush. Governments and companies across developing nations raised 20 billion euros this year, with 59 percent of the total coming in March as the ECB embarked on an unprecedented bond-buying plan, according to data compiled by Bloomberg.

Europe’s 1.1 trillion-euro quantitative-easing program is luring emerging-market issuers after the benchmark cost of borrowing in Europe’s shared currency fell to a 26-year low relative to the dollar last month. That discount will ensure the pipeline of offerings will remain active at least through the end of 2015.


Although Buffett suggested that a Grexit could be ‘a good thing’ there was little to report in terms of progress in Greece yesterday. Talks between the government and Greece’s creditors may continue next week while technical teams will stay in Athens to continue to collect data. In the meantime, German Chancellor Merkel and French PM Hollande yesterday re-emphasized the time pressure for the Greek government at a joint cabinet meeting.

March Performance Figures

As the quarter came to a close, the benefits in asset prices since the start of the QE programme can clearly be seen in financial markets. One clear winner has been European equity markets which led the way with the DAX returning 5% on the month, followed by the DJ Stoxx 600 Bank index (+4.9%), the Portugal General index (+4.4%), the FTSE MIB (+3.7%) and the IBEX 35 (+3.3%). The only asset to outperform these indices was the Shanghai composite which returned around +13%. Another big performer in the first month of expanded QE was the USD as EURUSD and GBPUSD both dropped around -4%. In the bond world the clear winner in Europe was the Bund which returned +1.5% on the month although this was exceeded by the +2% Gilt return. Interestingly higher beta European fixed income was left behind with Italian and Spanish government bonds returning +1%, EUR corporate HY returning 0% and EUR IG all, non -financial and senior financial bonds all losing -0.2% in what looks to be have been very technically (supply/demand) driven performance. The negative total return performance in EUR IG all and non -financial credit breaks these markets’ runs of 14 consecutive months of positive total returns. The assets with the worst performance in March were Greek equities (down -12% on rising political tensions) and Brent Oil (down -13%).