During March, we saw a solid recovery in global equity markets, especially the major U.S. indices, which recovered a considerable portion of the losses accumulated since the beginning of the year.

This performance was due in part to a reduction in the risk of a potential international escalation of the Russia-Ukraine war and, on the other hand, greater clarity from the Fed regarding the pace of rate hikes. That central bank raised interest rates for the first time since 2018 in response to recent inflationary pressures and, despite considerable headwinds, the Fed has demonstrated in 1965, 1984, and 1994 that it can raise rates without triggering immediate recessions. Additionally, in their latest minutes they discussed reducing the balance sheet at a pace of USD 95 billion per month, which would imply that it will take about 5 years to bring it to pre-pandemic levels of around USD 4 trillion.

Other factors that increased the appetite for stocks were: hedging against inflation, a sharp drop in fixed income, the worst since 1990, as well as the expectation that companies' corporate results will remain positive throughout the year, evidenced by certain domestic growth indicators and good employment reports. Powell's statements of being able to achieve a soft landing are supported by the current strength of the economy, which in March alone, created 431,000 new jobs, which reduced the unemployment rate to 3.6%, similar to that of February 2020 prior to the pandemic.

Grupo Inversión maintained during the month the defensive strategy defined at the beginning of the year, without significant changes in the portfolios. Short durations and floating rates were maintained in fixed income, which has avoided significant losses; likewise, exposure to equities was maintained, but always evaluating new opportunities for the portfolios. Although we continue to expect volatility in the short and medium term, discipline, long-term vision and adequate management of market risks are what will generate the best results for this and the following years.