Market Action

• Equities in the US returned to posting gains this week despite data that continues to portray a mixed recovery. Fed Chairwoman Yellen indicated a growing consensus in the FOMC of moving up the timeline for the first rate increase but lowering expectations for GDP growth this year and the expected Fed Funds Rate over the long term future. Markets interpreted the accelerated timeline as a sign the economy is improving.
•  CPI data this week came in at over 2% during the past 12 months, boosting optimism and risk appetite. Yields rose on the news initially but ended the week at the same point as last Friday.
•  Results this week were mixed in Asia. Japan continues to ride momentum off of an upward growth revision along with Prime Minister Abe’s reform efforts. In China, the central bank boosted liquidity and eased conditions to support the feeble real estate market.
•   Commentary on the new ECB measures announced by Mario Draghi late last week voiced skepticism and a notion of “too little, too late.” In addition, European economists this week tried to frame the market this week by talking down expectations of the coming stress tests.
•  Turmoil in Iraq continued to push oil prices higher during the week. Brent prices reached their highest point in over six months.
•  Gold held support above $1,300 this week. The disintegration of Iraq paired with Russian troop movements on Thursday to bring back geopolitical risk. In addition China continues to strike nerves with Vietnam as they attempt to install a second oil rig in contested waters.
•   Argentina was dealt two blows this week from the U.S. Supreme Court over its refusal to pay back creditors who did not participate in past bond swaps. The court refused to hear Argentina’s appeal over a lower court ruling and in a separate case granted permission to hedge funds to examine the nation’s books in search of assets.

View Full Market Update (PDF)