Market Comments: As of June 2014
The first half of 2014 is in the books, and both equity and fixed income asset classes have rewarded investors with positive returns so far. Here in the U.S., the S&P 500 is up 7.14% with all sectors showing gains. Utilities have led the way, thanks to an increased investor appetite for high yielding securities along with corresponding downward move in interest rates. Despite a smattering of geopolitical conflicts and increasingly experimental monetary policy overseas, the international MSCI EAFE Index and MSCI Emerging Markets Index have returned 4.78% and 6.14%, respectively. In fixed income markets, widespread yield declines have been a tailwind to performance for investment grade, municipal, and high yield bonds. Though still tapering its asset purchases, the Federal Reserve is committed to keeping monetary policy accommodative, with its primary focus seemingly on the labor market. Inflation has been edging up towards 2.0%, so any further price increases and resulting Fed action (or inaction) is something to keep an eye on.