Friends,

Major equity indexes were mixed in March. The Dow Jones Industrial average was up over 4.70% in March as Walgreens, Intel and Caterpillar all were up about 30%.  Nike and Apple, both Dow members were down about 7%.  The Russell 2000 on the other hand was down over 2.00% for the month. These return disparities highlight the importance of a well-diversified portfolio that allocates to wide variety of asset classes.

Once again US Government bonds continued their sell off in March. Yields on longer dated US Treasury Bonds increased by another 22 basis points driving bond prices significantly lower.  TLT, an ETF that tracks investment performance of US Government bonds with a maturity of 20+ years was down 5.24% in March and is down over 13.40% for the year.  As mentioned in our February newsletter, this is something we are keeping a keen eye towards as higher government interest rates could eventually impact other asset classes.

 Other fixed income assets performed much better.  Municipal Bonds and Mortgage Backed securities have significantly outperformed this year notching losses of only about 1% as the Federal Reserve asset purchase program continues to support the market.

One asset class worth mentioning is lumber. There is a significant lumber shortage causing the price of lumber to skyrocket. Much of the blame for the shortages and higher prices lies with the mill’s slowdowns and closures in the spring of last year. Mill owners anticipated a decline in demand for lumber due to COVID-19.  However, the exact opposite happened as low interest rates coupled with a low inventory of new homes increased demand. The cost of lumber is up a staggering 350% in a year.  The National Association of Home Builders estimates average new home prices are up an added $25,000 due to this increase.  The graph illustrates lumber prices over the last ten years.

LUMBER PRICES OVER THE PAST 10 YEARS

As always, if you have any questions, feel free to reach out.

Best,

Bob

This material is intended for general public use and is for educational purposes only.  By providing this content, Park Avenue Securities LLC is not undertaking to provide any recommendations or investment advice regarding any specific account type, service, investment strategy or product to any specific individual or situation, or to otherwise act in any fiduciary or other capacity.  Please contact a financial professional for guidance and information that is specific to your individual situation.  Russell 2000 Index measures the performance of the smallest 2,000 companies in the Russell 3000 Index of the 3,000 largest U.S. companies in terms of market capitalization. Dow Jones Industrial Average is a widely used indicator of the overall condition of the stock market, a price-weighted average of 30 actively traded blue chip stocks, primarily industrials, but also includes financial, leisure and other service-oriented firms.  Indices are unmanaged, and one cannot invest directly in an index. Past performance is not a guarantee of future results. All investments contain risk and may lose value. Investing in the bond market is subject to certain risks including market, interest rate, issuer, credit and inflation risk. Equities may decline in value due to both real and perceived general market, economic and industry conditions. 2021-119110  Exp 4/22. Source Bloomberg