Global Bonds Citi World Gov’t   1.3% 2.9 -3.6 -1.1 -0.6

Global equities continued their steady march upwards in April, driven by a positive uptick in economic indicators and moderating geopolitical concerns. Non-US stocks led the charge with international developed equities posting gains of 2.5%, propelled by a late-month rally in Europe as investors took comfort in Emmanuel Macron’s lead in France’s presidential election. Emerging market stocks were up 2.2% with robust manufacturing data and a stronger Korean won contributing to gains. US equities, while lagging their international counterparts year-to-date, were in the black with the S&P 500 returning 1.0% in April, as strong corporate earnings offset a lukewarm first quarter GDP growth estimate of 0.7%.

Investors priced in a more dovish Fed as focus shifted to how the central bank may unwind its balance sheet as a primary mechanism for tightening monetary policy. The 10-year Treasury rate dropped 11 basis points to 2.29%, leading to broad gains in US fixed income. The Barclays US Aggregate Bond Index was up 0.8% on the month. The Barclays US High Yield Index returned 1.2% as index level spreads compressed to 371 basis points. Improving economic fundamentals and easing fears around an interruption in global trade spurred gains of 1.6% in emerging market debt, according to the JP Morgan GBI-EM Global Diversified Index. The Bloomberg Commodity Index declined 1.6% on the month as a resurgence in US oil production and lower domestic demand for gasoline offset efforts by the OPEC to limit global production.

As markets continue to show resilience, we maintain a positive outlook towards international assets, and recommend an overweight position in developed and emerging market equities where we are leaning towards small-cap securities. At home, high valuations in equities and tight spreads in credit limit our enthusiasm. We believe spread compression has taken the luster off high-yield debt. To this end, we recommend alternative income investments such as bank loans or dynamic credit strategies.