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The short end of the yield curve sold-off to price in an earlier-than-expected rate hike, while the long end rallied as the prospect of tightening reduced longer-term inflation expectations.

Risk assets continued to perform well in March, and our monthly Risk Aversion Index (RAI) fell to near record low levels. We continue to favor high quality credits within fixed income.

High grade credit spreads were unchanged...Risk-on rally for high yield is getting to a mature stage...Tax advantage offered by munis make them attractive.

“Three Month” Up/Down Earnings Ratio Ends Q4 With a Whimper.

Small Cap Premium Bounces Back To 23%

Growth Takes It On The Chin In March.

Cap Weighted Slightly Better In Flat Performance Month.

Important characteristics of the broad sectors of the S&P 500 along with the S&P Mid Cap and Small Cap indices.

The Major Trend Index dropped 0.07 to 1.14 in the week ended March 28th, driven almost entirely by a steep decline in the Supply/Demand category.

Bond mutual fund saw estimated net cash outflows for the first time since early-February. Aside from bond and money market mutual funds, all other broad fund categories experienced net cash inflows for the week.

Recent net flows for domestic equity mutual funds turn negative, while domestic equity ETFs also experience net cash outflows for the first time in seven weeks. All year-to-date domestic equity fund tallies still hold in positive territory.

The Major Trend Index rose 0.02 to 1.21 in the week ended March 21st, matching its high for the rally leg off last summer's lows.

The Major Trend Index rose 0.01 to 1.19 in the week ended March 14th, with none of its categories witnessing a major swing during the week. This continues to support our aggressive net equity exposure levels of 65% in both the Leuthold Core and Global Funds.

Estimated net cash flows for domestic equity mutual funds fell slightly week-over-week to $0.9 billion but registered positive for a sixth consecutive week.

The Major Trend Index declined 0.03 to 1.18 in the week ended March 7th. The MTI and related market disciplines continue to support above-average allocations to equities in the Core Fund and Global Fund; net equity exposure in both funds now stands at 65%.

Estimated net cash flows for domestic equity mutual funds rose slightly week-over-week to $2.6 billion and registered positive for a fifth consecutive week.

Estimated net cash flows were positive for domestic equity funds, especially within the ETF subset. Bond ETFs, conversely, experience strong net cash outflows of $7.6 billion.

For the final week of February, the Major Trend Index closed at a five-month high of 1.21, up sharply from 1.09 at the end of January. While this bull market’s duration (five years) and magnitude (S&P gain of +175%) have exceeded our most optimistic expectations, the MTI and its related disciplines continue supporting our above-average exposure to equities in tactical accounts.

Both of our short strategies failed to keep pace with the inverse of their respective benchmarks this month.

Select Industries had no group deactivations this month, and we made no significant changes to our group weights. All group holdings currently rate Attractive. Global Industries eliminated our longest tenured group, Regional Banks, which we held for two years. We added Emerging Electric Utilities, which is our first EM oriented group since June 2013.