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Showing posts from September, 2013

Market Update

The last few months have seen some big changes in the bond market. At the end of August, the benchmark 10-year U.S. Treasury yield had risen more than 100 basis points from its May 1.66% low, with corporate, mortgage, and municipal bond yields following suit. This seems to have spooked mutual-fund investors, who yanked approximately $60 billion from bond funds in June, $11.7 billion in July, and $27.2 billion in August. (Source: Morningstar)

With bond yields now higher than they’ve been in several years and showing few signs of retreating, the question is: where do we go from here?

In our opinion the relative attractiveness of the bond market is currently less attractive than other areas of the market: Nevertheless, it remains an essential part of a well-diversified portfolio, helping to manage income and market volatility and drawdowns, particularly amid flights to more conservative investments. Thus, while we will recommend adjusting client portfolio exposure to favor valuations at…

Current Market Commentary

August was a difficult month for the U.S. equity market. The S&P 500 Index lost 2.90% while the Russell 2000 Index, tracking U.S. small-cap stocks, fell 3.18%. Overseas, equity markets fared slightly better. The MSCI World ex U.S. Index dropped 1.29%, while the MSCI Emerging Markets Index logged its fifth monthly decline in 2013 with a 1.72% loss.

Fixed-income markets followed suit with investment-grade bonds, as represented by the Barclay's U.S. Aggregate Bond Index, slipping 0.51%. Meanwhile, the Barclay's U.S. Corporate High-Yield Bond Index, a measure of the non-investment grade bond market, lost 0.61% in August.

The U.S. economy continued to show sputtering improvement in August, but concerns about the possibility of a U.S.-led military strike weighed on global stock markets and boosted the price of oil. Emerging-markets equities also continued to reflect investor unease surrounding both inflation and local loan markets. In fixed income, yields rose as redemptions con…