1st Quarter Newsletter
As we enter the second quarter of 2024, we are pleased to share some highlights and observations from the first three months of the year which included increased lending and investment sales activity despite an unexpected sharp rise in the 10-year US Treasury rate. With favorable inflation data throughout 2023 and six months having passed since the last federal rate hike in July, by year-end 2023 market sentiment had become not if but when the Fed would begin cutting rates. After peaking at 5% mid-October last year, the 10-year UST yield had declined to 3.87% at year-end and fed funds futures contracts then predicted about 150 basis points in rate cuts for this year. Many market pundits and market participants expected a rate cut in March and some expected as many as six rate cuts for 2024. Fast forward three months and the 10-year UST yield had risen over 50 basis points to 4.42% and fed funds futures contracts expectations for rate cuts for the year had declined to around only 60 basis points. Following the April 10th CPI data, the 10-year UST was trading at 4.58%, and now some are questioning whether there will be rate cuts in 2024. Significant Q1 commodity price increases (the S&P GSCI Index advanced 12%) have been making recent headlines and may also prolong the Fed’s “higher for longer” rates stance.