By Dr. Sonu Varghese via Iris.xyz
Equity markets continued their strong run in the second quarter of 2017, thanks to the global economy hitting its stride and registering the fastest level of growth in six years. For the first time since 2011, the U.S. is no longer the only shining star as economic momentum picked up across the globe.
The S&P 500 index gained 3.1% in the second quarter (Q2), boosting its year-to-date return (through June 30th) to an impressive 9.3%. This was eclipsed by the MSCI EAFE Index (net), which gained 6.1% in Q2 and ended the first half of the year with a 13.8% year-to-date gain. Emerging markets led the pack though; the MSCI Emerging Market Index (net) rose 6.3% in Q2 and posting a whopping 18.4% gain over the first half of the year.
At the same time, global central banks found more confidence to embark on a path of policy normalization sooner rather than later. However they face a dilemma in that inflation, which is already below their target, is falling across the developed world. This reality manifested itself in yield curve flattening.
As always, we shy away from making forecasts and predictions. However, there are five questions we are asking as the second half of the year gets underway.
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