Risk assets bounced back through the holiday-shortened week last week. Buoyed by comments from St. Louis Federal Reserve Bank President Bullard indicating the risk of recession is over-blown, the S&P 500, a proxy for large-cap US stocks, jumped more than three percent on Friday alone. The daily advance in the index was the largest since March of 2020.[1]For the week, the S&P gained over six percent, while the MSCI ACWI, a proxy for large-cap global stocks, advanced nearly five percent.[2]
Interest rates have risen dramatically throughout the first half of 2022, creating a challenging environment for bonds. However, Treasury rates have receded somewhat since peaking in mid-June, when the 10-year rate briefly exceeded the 30-year rate. We will be watching inflation and economic indicators closely in the weeks to come, as they should provide some indication of how aggressively the Federal Reserve will need to act in the second half of the year to tamp out inflation.
Prices & Interest Rates
| Representative Index | Current | Year-End 2021 |
|---|---|---|
| Crude Oil (US WTI) | $107.06 | $75.37 |
| Gold | $1,824 | $1,828 |
| US Dollar | 104.12 | 95.67 |
| 2 Year Treasury | 3.04% | 0.73% |
| 10 Year Treasury | 3.13% | 1.52% |
| 30 Year Treasury | 3.26% | 1.93% |
| Source: Morningstar, YCharts, and US Treasury as of June 27, 2022 |
Asset Class Returns
| Category | Representative Index | YTD 2022 | Full Year 2021 |
|---|---|---|---|
| Global Equity | MSCI All-Country World | -18.1% | 18.5% |
| Global Equity | MSCI All-Country World ESG Leaders | -18.5% | 20.8% |
| US Large Cap Equity | S&P 500 | -17.3% | 28.7% |
| US Large Cap Equity | Dow Jones Industrial Average | -12.4% | 21.0% |
| US Small Cap Equity | Russell 2000 | -20.9% | 14.8% |
| Foreign Developed Equity | MSCI EAFE | -18.4% | 11.3% |
| Emerging Market Equity | MSCI Emerging Markets | -17.0% | -2.5% |
| US Fixed Income | Bloomberg Barclays Municipal Bond | -9.3% | 1.5% |
| US Fixed Income | Bloomberg Barclays US Agg Bond | -10.9% | -1.5% |
| Global Fixed Income | Bloomberg Barclays Global Agg. Bond | -13.9% | -4.7% |
| Source: YCharts as of June 27, 2022 |