Last year, financial market returns were unusual.

With stocks and bonds facing meaningful drawdowns in the same calendar year. The first three months of 2023 provided a wonderful respite from the inhospitable landscape of 2022. January saw equity markets move higher, with many approaching 10% YTD returns by early February, 2023.

Source: Bloomberg, Nottingham Advisors, as of March 31, 2023

This risk-on bounce coincided with improving market sentiment and rising expectations for a no-landing (no recession) outcome for the economy. Inflation readings moving steadily lower buoyed hopes that the Federal Reserve rate hiking cycle would not have to be as aggressive as expected, increasing the likelihood of it ending without suffocating economic growth.

Risk markets swooned in early March as Silicon Valley Bank was seized by regulators after a historic run on its deposits. Their customers attempted to withdraw $42 billion in a single day. For context, the largest bank run in U.S. history had been Washington Mutual bank in 2008, totaling just $16.7 billion (over 10 days).

The suddenness of Silicon Valley Bank’s demise shook the equity markets, which quickly gave up most of the January rally, before moving up again to close out the first quarter with positive single-digit returns.

Interest rates were not immune from similar sentiment swings. Rates had moved higher as the Federal Reserve continued to raise the Federal Funds Rate and the economy seemed to be defying expectations of a slowdown.

Source: Bloomberg, Nottingham Advisors, as of March 31, 2023

From the start of the year through early March, Treasury yields inside of 10 years pushed higher while longer dated Treasury yields remained roughly flat. This changed quickly. Treasury yields reversed course and declined 20 to 40 basis points across the yield curve within days of the seizure of Silicon Valley Bank. Yields on shorter maturity Treasury bonds continued to decline through the end of the first quarter.

This reversal in the direction of interest rates pushed bond returns higher, taking them from slightly negative results in early March, to broadly positive returns at the close of the quarter. Europe experienced its own bank uncertainty in March. Credit Suisse was caught up in a crisis of confidence and facing liquidity concerns. Switzerland’s central bank offered Credit Suisse access to a $50 billion CHF liquidity facility. It was not sufficient to calm jittery investors’ nerves. Roughly a week after Silicon Valley Bank was seized in the U.S., Swiss authorities strongly encouraged UBS to acquire Credit Suisse in an attempt to avoid a national banking crisis, which has thus far seen success.

Timothy Calkins, CFA
Co-Chief Investment Officer

Timothy serves as a member of the Nottingham Investment Policy Committee. He brings over 22 years of investment experience to the team. Timothy is responsible for corporate and municipal credit research & trading, as well as contributing to our economic outlook and interest rate expectations. He also leads our alternative investment research and custom allocations, with a focus on private credit and liquid alternatives. Timothy’s membership and active participation with the Buffalo Angels group keep him connected to the local start-up community.

Nottingham Advisors offers both institutional and individual clients experience, sophistication, and professionalism when helping them achieve their goals. With over 40 years of serving Western New York and clients in more than 30 states, Nottingham tailors each solution to fit the specific needs of each client.

For more information about Nottingham’s offerings, visit or call 716-633-3800.

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