Related: Interest Rates Have Doubled: Beginning of the End of Central Bank Intervention?
The Bloomberg Barclays Aggregate Bond Index decreased by 0.10% for the month. Credit once again outperformed, with investment grade corporates increasing by 0.31% and high yield bonds increasing 0.14%. Treasuries and municipals declined by 0.16% and 0.36%, respectively.
EQUITY MARKETS
U.S. stocks, as measured by the S&P 500, again posted gains and continued their post-election rally. Value stocks easily outpaced growth stocks for the month and small cap stocks handily outperformed large cap stocks. Developed international stocks had a mixed performance, with the MSCI EAFE Index declining in value and the MSCI ACWI ex USA Index increasing in value. Emerging market stocks posted a gain for the month.
FIXED INCOME MARKETS
Rates increased across most of the yield curve with the exception of the 30-year bond, which declined by one basis point. The yield on the 10-year Treasury increased 14 basis points in June to 2.35%. The Bloomberg Barclays Aggregate Bond Index declined for the month, driven by Treasuries’ negative return. Credit exposure continued to be rewarded as investment grade corporates and high yield bonds turned in positive returns. Municipal bonds declined in value for the month.
ECONOMIC DATA
The economic acceleration experienced in April all but disappeared in May. Most economic data points showed lower levels than the previous month with the notable exceptions of new and existing home sales. First quarter GDP was revised up to 1.4% from 1.2%. New job openings, as reflected by the Job Opening and Labor Turnover Survey, hit an all-time high. Unfortunately, most other economic indices showed slower growth. As expected, The Federal Open Market Committee raised rates by .25% to a range of 1% to 1.25% at the meeting that concluded on June 14th. This is the second rate increase this year (out of four meetings). Four more meetings are scheduled to be held this year, with the next meeting scheduled for July 25-26. Presently, no rate increase is expected.
| Event | Period | Estimate | Actual | Prior | Revised |
|---|---|---|---|---|---|
| Nonfarm Payroll | May | 182,000 | 138,000 | 211,000 | 174,000 |
| Unemployment | May | 4.40% | 4.30% | 4.40% | |
| ISM Manufacturing | May | 54.8 | 54.9 | 54.8 | |
| ISM Non-Manufacturing | May | 57.1 | 56.9 | 57.5 | |
| Retail Sales ex Auto & Gas | May | 0.30% | 0.00% | 0.30% | 0.50% |
| PPI MOM | May | 0.00% | 0.00% | 0.50% | |
| PPI MOM ex Food & Energy | May | 0.10% | 0.30% | 0.40% | |
| PPI YOY | May | 2.30% | 2.40% | 2.50% | |
| PPI YOY ex Food & Energy | May | 1.90% | 2.10% | 1.90% | |
| CPI MOM | May | 0.00% | -0.10% | 0.20% | |
| CPI MOM ex Food & Energy | May | 0.20% | 0.10% | 0.10% | |
| CPI YOY | May | 2.00% | 1.90% | 2.20% | |
| CPI YOY ex Food & Energy | May | 1.90% | 1.70% | 1.90% | |
| Industrial Production | May | 0.20% | 0.00% | 1.00% | 1.10% |
| Housing Starts | May | 1,220,000 | 1,092,000 | 1,172,000 | 1,156,000 |
| Building Permits | May | 1,249,000 | 1,168,000 | 1,229,000 | 1,228,000 |
| New Home Sales | May | 590,000 | 610,000 | 569,000 | 593,000 |
| Existing Home Sales | May | 5,550,000 | 5,620,000 | 5,570,000 | 5,560,000 |
| Leading Index | May | 0.30% | 0.30% | 0.30% | 0.20% |
| Durable Goods Orders | May (P) | -0.60% | -1.10% | -0.80% | -0.90% |
| S&P CoreLogic CS 20-City YOY | Apr | 5.90% | 5.67% | 5.89% | 5.88% |
| Personal Income | May | 0.30% | 0.40% | 0.40% | 0.30% |
| Personal Spending | May | 0.10% | 0.10% | 0.40% | |
| GDP Annualized QOQ | 1Q (T) | 1.20% | 1.40% | 1.20% | |
| Univ. of Mich. Sentiment | Jun (F) | 94.5 | 95.1 | 94.5 |
Source: Bloomberg
Click here for a PDF of the Monthly Recap.
This article was written by Glenn Dorsey, Senior Vice President, Client Portfolio Manager, at Clark Capital Management Group, a participant in the ETF Strategist Channel.
Disclosures
Past performance is not indicative of future results. This is not financial advice or an offer to sell any product. Clark Capital Management Group, Inc. reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. It should not be assumed that any of the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein. Clark Capital Management Group, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Clark Capital’s advisory services can be found in its Form ADV which is available upon request. Material presented has been derived from sources considered to be reliable, but the accuracy and completeness cannot be guaranteed. Nothing herein should be construed as a solicitation to buy, sell or hold any securities, other investments or to adopt any particular investment strategy or strategies. For educational use only. CCM-993