For the week ending Friday June 20, markets broadly continued to move higher with the S&P 500 and the Dow making new all time highs. The majority of developed stock indices rose within a range of +0.44% to +2.01% for the week, though emerging markets lagged slightly ranging between +0.04% and -0.17%. REITs also had a generally strong week ranging between +1.07% and -0.36%. As expected, fixed income was weaker at a time of strong equity returns, though still generally positive ranging from -0.10% to +0.52%. Overall, we believe the picture is one of strengthening growth, especially on the industrial side of the economy, though certain consumer data is somewhat less robust.
New York manufacturing is at a 4 year high based on survey data, and industrial production is also apparently rebounding strongly. Housing market data continues to appear mixed with fewer housing starts in May, although with some positive recent signs on pricing. We believe inflation is edging up ahead of expectations based primarily on energy and food costs. However, inflation is still at low levels in absolute and historical terms, we believe employing TIPS in our portfolios helps to offset the impacts of unexpectedly rising inflation. Unemployment data was also good, continuing a recent theme, but this was as expected.
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