Market Commentary

Questions about the health of the global economy continued to weigh on markets during the quarter. Oil prices retrenched further while the Bank of Japan surprised investors by lowering short-term interest rates below zero. With this as backdrop, equities continued their global sell-off, with U.S. large caps returning -5.0% and international returning -7.2%. The tech-dominated Nasdaq, dominated by growth stocks, returned -7.9% and domestic small caps returned -8.8%. Bonds functioned as a safe haven during the month, with intermediate core bonds returning 1.4% and municipals 1.2%. Investors effectively drove down yields on 2yr and 10yr Treasuries to levels not seen since April 2015.

 
 
Several years of below average market volatility has been replaced by volatility levels last experienced in 2012. Items forefront in the financial media today as causes of the heightened volatility include China, the commodity price crash, higher US interest rates and widening credit spreads. These concerns are anecdotal to the broader overriding issue which is the risk of slowing global growth and the related difficulties. Attached is a quick update on several of these factors.

 
 
Market Commentary

The Federal Reserve’s decision to increase interest rates further strengthened the dollar, thus applying more pressure to crude oil and emerging markets. Stocks lost their footing during the month, with domestic large caps returning -1.6% and small caps -5.0%. In the S&P 500, defensive sectors generated positive results while cyclical/export sectors (e.g., energy, manufacturing, cyclicals) ended in the red. Bond markets also experienced volatility, as shorter-term interest rates drove Treasury prices lower. Corporate bonds, fueled by liquidity concerns in the high yield bond market, ended the month lower. The lone bright spot were REITs, which continue to benefit from the strength of the domestic housing recovery.

 
 
Market Commentary

Global markets produced mixed results during November, with modest gains in domestic equities offset by losses in international markets and corporate bonds. Large cap stocks in the U.S. returned 0.3%, while small caps were the top performer during the month returning 3.3%. International stocks fell during the month, with developed economy stocks
losing ‐1.6% and emerging market stocks, which are particularly commodity sensitive, losing ‐3.9%. The strength of the U.S. dollar provided further headwinds for commodity markets, while crude oil declines caused investors to sell energy‐related investments. Core bonds lost ‐0.3%, as shorter‐term interest rates reached a 5 year high in anticipation of a Fed rate hike.

 
 
Market Commentary

Stocks around the globe rallied sharply in October, helping make up for losses experienced during a volatile Q3. In the U.S., large cap stocks returned over 8%, while mid and smaller cap stocks returned 5-6%. Turning abroad, developed international and emerging market stocks were both up over 7%. On the year, both domestic and international developed stocks are back in positive territory on the year. Growth stocks again trumped value stocks, further extending their outperformance year to date. Core investment grade bonds were flat during the month, with strength in corporate credit offset by a sharp uptick in short-term interest rates.

 
 
Market Commentary

Equities extended their losses into September, with investors continuing to question the pace of global growth as the Chinese economy continued showing signs of weakness. Developed market equities were not immune, losing 2-5%, while emerging market equities lost 3%. In the U.S., consumer discretionary and utility stocks were the only sectors to generate positive results, while energy and materials continued to lag.  WTI crude oil closed down 8% for the month but remains in the $40 range that it has traded in for the last few months. Treasury yields fell on news that the Fed would keep interest rates unchanged and, thus, supported bond markets and provided a safe haven from risk assets.

 
 
Global equities slumped during the month on the largest contraction in the Chinese manufacturing sector in over six years. This called into question the sustainability of the global economic expansion, which caused investors to sell equities across the board.

 
 
The global sell-off continued today on the back of declines last week. China, declining crude prices, continued concerns over Greece, and the Federal Reserve’s near-term interest rate policy have created a potent cocktail for investors to swallow.

 
 
Market Commentary

Equities in developed economies generated strong results, led by continued economic improvement in the Eurozone and gains in technology and consumer stocks in the U.S. The largest headwind in the U.S. remains energy, which suffered as oil traded below $50/bbl to a four month low, creating fresh losses in energy-related investments and negatively impacting Q2 corporate earnings. Bonds generated their first positive return in three months, despite the Fed further communicating the likelihood of an interest rate hike later this year. A sell-off in Chinese equities and further weakness in the global commodity complex resulted in large losses in emerging markets.


 
 
Market Commentary
Concerns over Greece exiting the euro and the Federal Reserve raising short-term interest rates were the dominant themes that impacted global markets during June. Stocks in developed economies, including the U.S. and Europe, sold off ahead of a June 30 deadline for Greece to make a €1.54 billion debt payment to its creditors. In the U.S., small cap stocks were the lone bright spot given their closer ties to the domestic economy, while income‐oriented investments from bonds to utility stocks experienced losses as the Fed held the door open to raising rates later this year.