Market Commentary Posted on

July 2018 Market Commentary – ‘Growth’ Still Has Some Gas Left in the Tank

Data Source: Bloomberg


  • Global equity markets advanced in July led by the U.S. and Europe. Japan lagged following a negative response to a monetary policy shift by the Bank of Japan.
  • U.S. fixed income was flat but high yield and emerging market debt outperformed on the heels of strong global equity performance.  Credit spreads narrowed after having widened throughout the 2nd quarter.
  • Commodities and precious metals underperformed as industrial metal weakness is sending a contrary signal to the rosier growth outlook embedded in equity investor expectations. 
  • ‘Growth’ and ‘momentum’ stocks dominated all other investment styles through much of July and then reversed sharply following earnings disappointments from some key technology bellwethers. 
  • Concerns that China is slowing down were partially alleviated by a new stimulus initiative announced by the Chinese government. 
  • The U.S. 2-10 year term structure continued to narrow up until the Bank of Japan policy shift.  Following the shift, global bond yields rose with the 10-Year U.S. Treasury settling around 2.95-2.97% towards the end of the month. 
  • Heading into the fall, the focus will shift towards the Federal Reserve, where the Fed is expected to raise rates by another 0.25% at the September meeting followed by another rate hike in December. 
  • For the time being, trade dispute headlines will continue to dominate day-to-day volatility; hopefully, the excessive posturing on both sides will lead to an acceptable outcome.

To view the full commentary, click here.

By: Benjamin Lavine