Second Quarter Market Review

What had been shaping up to be a fairly uneventful second quarter for financial markets turned anything but over the final two weeks as news of Britain’s decision to leave the European Union shocked markets just as the quarter came to a close. Despite catching global markets flat-footed with the “Brexit” news, global equities shrugged off the geopolitical drama and rebounded several percentage points in less than a week to finish the quarter 1% higher. Although first quarter earnings were nothing to write home about, continued easy monetary policy from the Fed and a stabilization of commodity prices helped set the stage for U.S. equities to remain in positive territory. U.S. small caps outperformed their larger capitalization peers, while commodities were the best performing asset class, up over 13% as oil prices stabilized and reached over $50 a barrel.

2016 07 image - chart 1

Core fixed income allocations continued their advance this quarter, with returns rivaling equities. As central banks around the world have embraced the idea of easy monetary policy and more specifically, negative interest rates, investors have looked for higher yields and the safety that US debt provides, pushing the 10-year U.S. Treasury down 17% to 1.49% at quarter end. We continue to believe core bond positions can be enhanced and diversified by the inclusion of global bonds as interest rate policies diverge across the world.

2016 07 image - chart 2

Important Note: This material is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. The opinions expressed herein are those of the named fund advisors at the time written.  Actual economic or market events may turn out differently than as presented above.