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Markets & Economy

The Economy: August 2014

Market Comments: As of August 2014

After a brief decline in July, U.S. equity markets rebounded strongly in August, averting the larger correction predicted by many market pundits have. The S&P 500 gained 4% in the month and is now up close to 10% year to date. Small Cap stocks, a noticeable laggard thus far in 2014, moved back into positive territory. Economic data out of Europe has weakened in recent months, increasing pressure on the European Central Bank to provide further stimulus to the regions. International developed market stocks have responded negatively to this weakness, declining 2.12% over the past three moths. Faster GDP growth and inflation hovering close to 2% her in the U.S. , suggest that the current 10-year treasury yield of 2.34% may be too low. However, fixed income yields across the globe remain at depressed levels as well, making U.S. treasuries relatively attractive, and seemingly keeping a lid on any significant interest rate increases for the time being.