Investment Commentary
Global stocks ended May slightly below where they started the month (MSCI World Index -0.4%). Many developed markets, including the US market, posted small gains while emerging market stocks gave back some of their strong gains from the first four months of 2015. The Chinese central bank's decision to tighten lending restrictions led to 6.5% one-day selloff in the Chinese stock market and contributed to losses in other emerging markets.
Whereas most stock markets traded in a tight range during May, bond yields were unusually volatile. The 10-year Treasury yield started the month at 2.05%, reached as high as 2.36%, and closed the month at 2.12%.
Economic data remained mixed in May. Unexpectedly strong new housing starts and housing permit data were positive along with encouraging employment figures. Alternatively, retail sales were sluggish and the 1st quarter GDP figure was revised lower to -0.7%. Despite the GDP contraction in the 1st quarter which was attributed to severe weather and a stronger dollar, GDP growth over the past 12 months is 2.7%.
Much fanfare continues to be made of the domestic market's new highs (10 new highs this year) as perhaps a signal of excessive valuation. It is a relevant reminder that the market trades within 5% of its all-time high on roughly half of all trading days (44% of days since 1950). Announcement of new highs makes for good news but offers no useful predictive ability of the future.
You can reference the RPG Monthly Market Snapshot by clicking here for some key economic data points and index returns. We welcome any comments, questions, or suggestions.
|
|
|
