Market Commentary | December 19, 2023
Inflection Point
The Federal Reserve’s December 12th press conference bore a pale resemblance to a declaration of victory in its battle against inflation and marked a pivotal point in monetary policy. Quickly ensued a parade of pundits predicting when and by how much the Fed would cut interest rates and stocks went wild. 10Y Treasury yields accelerated their descent and today we see 3.91%.
In our portfolios, we saw new life breathed into the much-maligned interest rate-sensitive sectors (REITs, Utilities, Energy, Infrastructure). We also saw opportunities to reallocate assets for enhanced returns. Our placeholders, chosen to buffer the effects of inflation, higher interest rates, and the prospect of recession, have worked well in retaining relatively strong market valuations while paying outsized dividend yields.
Fortunately, issues do not all move in tandem so we can sell the appreciated, more fully valued positions and redeploy capital into the most beaten-down sectors. You may see new positions in housing, retail, energy producers, and infrastructure.
We appreciate your continued participation during the pandemic and through to the better time on the horizon.
We wish you Happy Holidays and an exceptionally good New Year!
Notes and Disclosure
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