Tom De Marco at Fidelity says bonds outperformed stocks on a total return basis in the first quarter - but don't expect this to continue

Tom De Marco at Fidelity says bonds outperformed stocks on a total return basis in the first quarter - but don't expect this to continue. Everybody was talking about a great rotation. But in Q1 bonds beat stocks handily on a total-return basis. Soft US economic data in late December, January, and February, concerns about China's economy, global growth in general, and comments by Janet Yellen about when the Fed might begin raising rates, took some of the air out of the stock market. While all that was happening, there were solid fund flows into the fixed-income market, because of investors' demand for yield. However, De Marco says I think improving economic numbers are going to be the main headwind for the fixed-income market... GDP growth should start to strengthen from here, and that may help pull rates higher, leading to weaker or negative returns in the fixed-income market. (VIEW LINK)