Distressed Financial Assets Shine after Years of Poor Performance
October 5, 2024
By Mitchell Anthony
US Economy slows and market leadership takes a pause?
Financial markets across the board performed well in the third quarter of 2024. Equities gained again after three straight quarters of solid returns. Fixed income which had not performed well for many quarters saw strong gains as interest rates fell significantly, and alternative investments like bitcoin had another good quarter as well. Opinions about the economy changed significantly from week to week throughout the quarter. Many strategists were expecting soft growth or recession to emerge however this was not the case and GDP came in much stronger than expected at 3% which is well above the trend it had been on for several years. These strategists were worried about a hard landing in the economy and that the Fed’s actions to tame inflation would ultimately bust this economic cycle. Seems as though they were wrong! The Inflation cycle for the most part ended and with it came lower interest rates across the board from short-term rates to longer-term mortgage rates. The decline in rates was as much as 50 basis points or one half of 1%. Investors hoping for rates to return to the near zero levels of the last decade rushed into bonds and ran prices up and yields down. This seemed to most seasoned investors to be a bit premature?
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