- Total long-term flows were negative across the board for the two weeks ended June 12, although equities experienced more severe outflows.
- Total equity outflows stood at $5.5 billion, with the outflows much larger in the second week. Domestic equities largely bore the brunt of outflows, experiencing negative flows of $4.5 billion.
- At the same time, bonds saw negative flows in the week ended June 5, but experienced inflows of $3.4 billion in the following week. Taxable and investment grade bonds were among the biggest losers.
- The U.S. Federal Reserve kept interest rates unchanged this month but signaled plans to make a cut early next year, as it seeks to sustain growth amid a trade war between the U.S. and China. Although expectations for a June cut were low, economists had predicted one in July.
- As expected, Bank of Japan left interest rates unchanged at minus 0.1% and pledged to guide 10-year government bond yields around zero percent.
- The U.K. central bank kept its monetary policy steady amid renewed Brexit fears as Boris Johnson, a fierce Brexiteer who promised to take the country out of the union with or without a deal, is the favorite to win the race to become the next Prime Minister. The central bank kept its main interest rate firm at 0.75%, saying a mix of Brexit tensions and global trade jitters was negatively impacting growth.
- U.S. consumer price index (CPI) rose 0.1% in May, triggering further speculation that the Federal Reserve will raise interest rates to sustain inflation. For the 12 months ended in May, CPI advanced 1.8% compared with 1.9% in April. Core CPI came in at 2% in May versus 2.1% in April.
- U.S. retail sales advanced 0.5% last month, largely in line with what economists had expected. Meanwhile, April data was revised up to 0.3% from 0.2% previously.
- U.K. annual inflation declined to 2% in May from 2.1% in the prior month, hitting Bank of England’s target. The decline was driven by a drop in airfare prices and slower housing growth.
- All assets were up these past two weeks, with technology shares clearly the best performers.
- The Nasdaq 100 index (NASDX) surged more than 4% for the two weeks ended June 21, as optimism regarding talks between U.S. President Donald Trump and his Chinese counterpart Xi Jinping at G20 boosted investor sentiment.
- Total bond market fund (VBMFX) rose just 0.37% over the past two weeks, representing the worst performance from the pack.
- Foreign equities all posted gains with the exception of Indian equities.
- T.Rowe’s Latin America fund (RLAIX) gained 4.78%, becoming the top performer from the bunch.
- India fund (WIINX) experienced a decline of 1.64%, as many investors took money off the table following a bull run stemmed from optimism about Narendra Modi’s landslide victory in national elections.
Major Asset Classes
The Bottom Line
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