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By Matt Harris, CFA
Senior Portfolio Advisor
HilltopSecurities Asset Management
Treasury yields are slightly lower this morning while stocks are higher following stronger-than-expected economic data to start the month. February retail sales and the March ISM Manufacturing Survey both beat expectations, helping offset a flurry of geopolitical headlines tied to tensions in the Middle East and concerns over control of the Strait of Hormuz.
Retail sales increased 0.6% in February, topping the 0.5% forecast, while the control group, which feeds directly into GDP, rose a solid 0.5%. This marked one of the strongest monthly retail prints since mid-2025 and should push near term GDP estimates higher, including the Atlanta Fed’s GDPNow model, currently tracking around 2% growth. Spending at restaurants and bars rebounded 0.4% after a January decline that was partly weather-related. Worth mentioning, this data is from February and predates the recent surge in energy prices when gasoline averaged closer to $3 per gallon versus over $4 today.
Manufacturing data was also stronger, with the March ISM rising to 52.7, the third consecutive month in expansion territory and the highest reading since 2022. However, inflation pressures re-emerged as the prices paid index jumped to 78.3, nearly 20 points higher over the past two months. With energy prices elevated amid the conflict with Iran, higher input costs could begin flowing through to consumer prices, prompting many economists to revise inflation forecasts higher.
Looking ahead to Friday’s jobs report, today ADP showed payroll gains of 62k in March, led by small businesses. The Good Friday employment report is currently expected to show payroll growth of roughly 65k with the unemployment rate holding steady at 4.4%.
Market pricing has shifted notably in recent weeks, assigning higher probabilities to rate hikes, an outcome that still appears unlikely. However, if elevated oil prices persist or rise further, the greater risk may be a growth slowdown or recession, a scenario that would ultimately pull the Fed back toward easing.
About Scott McIntyre, CFA
As HilltopSecurities Asset Management’s Co-Head of Investment Management, Scott McIntyre specializes in investment management services and is responsible for the management, oversight and trade supervision of more than $30 billion in institutional fixed income assets for HilltopSecurities’ public sector municipal clients. Scott also provides investment advice and consulting, reviews local government investment policies, formulates overall investment strategies, evaluates account performance and oversees the day-to-day operations. He is a member of the Chartered Financial Analyst (CFA) Institute and a CFA Charterholder, a two-term advisor to the GFOA Treasury and Investment Management (TIM) committee, a Registered Investment Advisor, and holds FINRA Series 7, 24, 63, and 65 licenses.
About Greg Warner, CTP
As HilltopSecurities Asset Management’s Co-Head of Investment Management, Greg Warner specializes in investment management services and is responsible for the management and oversight of more than $30 billion in institutional fixed income assets for HilltopSecurities’ public sector municipal clients. Greg coordinates all client services and portfolio management duties, including security evaluation and portfolio analysis, trading, investment reporting, board presentations, and monitoring of broker-dealer relationships. He is an advisory committee member to the Texas Association of Counties, a member of the Government Treasurers’ Organization of Texas (GTOT), a Registered Investment Advisor, a Certified Treasury Professional (CTP) and holds FINRA Series 7, 63, and 65 licenses.
About Matt Harris, CFA
As HilltopSecurities Asset Management’s Senior Portfolio Advisor, Matt Harris specializes in investment management services for public sector municipal clients. He developed his experience in the banking industry, supporting balance sheet management, interest rate risk analysis, liquidity planning, and investment strategy implementation. At HilltopSecurities, he works closely with clients to develop and implement customized investment strategies, oversees account documentation and reporting, and assists clients with the public funds depository review process, including competitive RFP evaluations. Harris is a member of the CFA Institute and a CFA Charterholder, a Registered Investment Advisor, and holds FINRA Series 7, 63, and 66 licenses.
The paper/commentary was prepared by HilltopSecurities (HTS). It is intended for informational purposes only and does not constitute legal or investment advice, nor is it an offer or a solicitation of an offer to buy or sell any investment or other specific product. Information provided in this paper was obtained from sources that are believed to be reliable; however, it is not guaranteed to be correct, complete, or current, and is not intended to imply or establish standards of care applicable to any attorney or advisor in any particular circumstances. The statements within constitute the views of HTS as of the date of the document and may differ from the views of other divisions/departments of Hilltop Securities Inc. and its affiliates. In addition, the views are subject to change without notice. This paper represents historical information only and is not an indication of future performance. This material has not been prepared in accordance with the guidelines or requirements to promote investment research, it is not a research report and is not intended as such. Sources available upon request.
Hilltop Securities Inc. is a registered broker-dealer, registered investment adviser and municipal advisor firm that does not provide tax or legal advice. HTS is a wholly owned subsidiary of Hilltop Holdings, Inc. (NYSE: HTH) located at 717 N. Harwood St., Suite 3400, Dallas, Texas 75201, (214) 859-1800, 833-4HILLTOP.
