After a few weeks of disappointing returns the major averages in the U.S. posted solid gains led by the Healthcare and Consumer sectors. European markets continue to be plagued by the lack of progress between Greece and the troika.
Janet Yellen offered an upbeat assessment of the U.S. economy at her press conference on Wednesday. The positive sentiment pushed markets higher on the day and has increased the odds for a September rate increase. Benchmark yields were down on the week however, down 25bps from their 2015 highs.
Housing data continues to come in strong, boosting optimism for the U.S. economy. While capacity utilization data came in weaker than desired most analysts see a stable economy.
Russia lowered interest rates by 1% this week. The economy in Russia continues to suffer from weak global energy prices. While Western sanctions have cut off key financing markets for many in the Russian economy recent reports have cited that corporations and individuals in Russia are finding ways to get around the restrictions.
The Swiss franc has remained at strong levels since its January free float. However the Swiss National Bank this week threated action to quell the currency’s rise, citing a risk of recession and extremely low levels of inflation.
Saudi Arabia opened its stock market to foreign investors on Monday. Flows into the market are still restricted depending upon qualifications but the market’s liberation marks the country’s starting attempt to build businesses and industries outside of the energy sector to stimulate growth long-term.
Corporate credit spreads have widened over recent weeks to reach their broadest level of 2015. High yield bonds, while also widening versus Treasuries, have performed better than investment grade assets despite inferior quality.