By Horizon Investments

A somewhat fuzzy global economic picture developed last week. In the U.S., better-than-expected results were reported in terms of initial jobless claims, the unemployment rate, factory orders and ADP employment. But nonfarm payrolls and the ISM manufacturing index disappointed.

International economic data was also mixed. Russia and China PMI, as well as Eurozone manufacturing PMI, came in better than expected. But UK manufacturing PMI, Brazil’s industrial production and Mexico’s GDP failed to meet expectations.

In the U.S. equity market, technology stocks outperformed following better-than-expected first-quarter earnings from tech bellwether Apple. Consumer staples underperformed, however, as rising input costs and limited pricing power squeezed quarterly results for companies in the sector.

Overseas, European stocks performed best due to continued accommodative monetary policy from the European Central Bank. But emerging markets equities struggled as the rising U.S. dollar hurt emerging markets’ currencies.

In the fixed-income arena, long-duration Treasurys benefited from falling interest rates. Emerging markets debt underperformed, however, as bond investors reduced their risk exposure.

GAIN: Active Asset Allocation

Global stock markets were generally flat for the week, despite some ups and downs around various corporate earnings announcements and geopolitical developments. Overall, markets at the moment seem to be range-bound with little direction. Small-caps performed well relative to large-caps, in part because they face less big-picture headline risk than do large-cap stocks. Growth stocks also outperformed value stocks for the week.

In the bond market, there was little separation between sector returns. The 10-year U.S. Treasury yield remained below 3% and much of the recent economic data has been mixed—suggesting that the Federal Reserve Board may be able to take its time making monetary policy adjustments. We continue to favor corporate credits, but are a bit more neutral on duration.