Domestic equities gained nearly 1% while foreign equities lost roughly 1% for the week. Strong performance from growth stocks—both large-cap and small-cap—re-emerged following a week in which growth/momentum stocks experienced more volatility than the broader market. We are seeing some slowing in the real estate market, but (outside of a few specific sub-sectors) we don’t see a large bubble.
It was a relatively flat week for bonds, Although the yield on the 10-year U.S. Treasury note closed above 3% for the first time since late May, it quickly came back down to end the week where it started. Our barbell position in longer-duration Treasuries was down slightly for the week.
PROTECT: Risk Assist
Global trade-related concerns led to a choppy week in the financial markets. At one point, volatility expectations (as measured by the VIX) spiked to above 14, but later fell back to just above 12.
We updated our volatility forecasts for the coming month, which generally call for lower overall volatility.
SPEND: Real Spend
It was a generally flat week for both global equities and the U.S. broad-based bond markets, with the one-year return spread between the asset classes currently at just over 12%. The spread between global equities and the broad-based U.S. bond market is even wider, at more than 18%.
The Real Spend equity portfolios currently have a 70% allocation to domestic equities, while the Real Spend fixed-income portfolios have overweight allocations to preferred stocks and high yield bonds. As a reminder, the allocations generally follow the longer-term views from our asset allocation process.
Yield-focused investors saw a split week: Most fixed-income yield plays were flat, while equity-based yield investments were up strongly. For example, emerging markets debt was down 75 basis points while REITs were up more than 3% and master limited partnerships gained more than 5%.