Performance

Bonds saw relatively solid returns in March as treasury yields declined moderately, and credit spreads compressed slightly. Our fund returned a positive performance of 1.5%* over the period of March, outperforming comparable fixed income indices. The US Federal Reserve [FED] left rates unchanged this month, at the previous target range of 5.25% to 5.5%. Most importantly, the FED Chair Jerome Powell downplayed the recent worse-than-expected inflation readings at the post-FED meeting conference. Powell also stated that he believes that the policy rate is “at its peak” in this tightening cycle. The FED Dot Plot, a plot that projects the average FED funds rate expected by voting members in the coming years, showed that voting members continued to expect roughly 75 basis points worth of rate cuts this year. The dovish comments along with the publication of the Dot Plot, were the primary reasons that contributed to the rally in credit markets this month. Derivative markets, as of the end of March, were pricing in roughly 67 basis points worth of rate cuts throughout 2024. Data released in March came in mixed. The growth in the US Consumer Price Index [CPI] for February came in at 0.4% MoM and 3.2% YoY, with the former coming in as expected, while the latter coming in 10 basis points higher than expected. The growth in the Personal Consumption Expenditure Price Index [PCE], the FED’s preferred inflation gauge, came in at 0.3% MoM, and 2.5% YoY for the same period of February. The former number came in 10 basis points lower than expected while the latter number came in as expected. The unemployment rate for February came in at 3.9%, higher than the anticipated 3.7%. Generally, data received for February suggests that the economy remains strong, while prices remain sticky, and inflation remains elevated. Throughout the month of March, we also took the opportunity of the rally in the high yield segment and managed to sell some positions from the Fund, contributing to the decrease in leverage of our fund down to -0.3%. * Net performance, B1 shares.