Equity markets rallied late in May to post the third consecutive month of positive returns. The S&P 500 ended 1.80% ahead for the month. Risk was rewarded as small caps outpaced large caps. Growth stocks nosed out value stocks. Developed international markets eeked out a gain, but emerging markets dropped by 3.90%.

The U.S. fixed income markets were mixed. The yield curve flattened as the odds of a Fed rate hike increased. We saw bonds with longer maturities increase in value while bonds with shorter maturities declined in value. For example, the U.S. Treasury 20+ Year Index increased 0.86%, while the Intermediate Index declined 0.11%. The Barclays U.S. Corporate High Yield Index continued its strength, increasing by 0.62%, outpacing both Treasuries and investment grade corporates.

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