Most major stock indices posted gains for the month of June. Large cap stocks, as measured by the S&P 500, have increased every month since the election. The S&P 500 increased 0.62% for the month, while small cap stocks, as measured by the Russell 2000, increased 3.45%. Value stocks took a leadership role, gaining 1.77% compared to growth stocks, which were unchanged for the month. Developed international stocks trailed domestic stocks as the MSCI EAFE Index declined 0.15% and the MSCI ACWI ex-USA Index increased 0.34%. Emerging market stocks increased by 1.04% for the month.

Fixed income markets turned in a mixed performance for June as interest rates increased over much of the yield curve in response to the FOMC’s rate increase to a range of 1% to 1.25% for the Fed Funds Rate. Credit conditions continued to improve during the month. As a result, corporate bonds outperformed Treasuries. The yield curve steepened a bit during the month, although the 30-year Treasury bond yield declined by one basis point. The yield on the benchmark 10-year Treasury increased 14 basis points to 2.35% during the month. The Fed meets again July 25-26, and at this point, no change in rates is expected. There are four more FOMC meetings scheduled this year. The Bloomberg Barclays Aggregate Bond Index decreased by 0.10% for the month. Credit once again outperformed, with investment grade corporates increasing by 0.31% and high yield bonds increasing 0.14%. Treasuries and municipals declined by 0.16% and 0.36%, respectively.


U.S. stocks, as measured by the S&P 500, again posted gains and continued their post-election rally. Value stocks easily outpaced growth stocks for the month and small cap stocks handily outperformed large cap stocks. Developed international stocks had a mixed performance, with the MSCI EAFE Index declining in value and the MSCI ACWI ex USA Index increasing in value. Emerging market stocks posted a gain for the month.


Rates increased across most of the yield curve with the exception of the 30-year bond, which declined by one basis point. The yield on the 10-year Treasury increased 14 basis points in June to 2.35%. The Bloomberg Barclays Aggregate Bond Index declined for the month, driven by Treasuries’ negative return. Credit exposure continued to be rewarded as investment grade corporates and high yield bonds turned in positive returns. Municipal bonds declined in value for the month.


The economic acceleration experienced in April all but disappeared in May. Most economic data points showed lower levels than the previous month with the notable exceptions of new and existing home sales. First quarter GDP was revised up to 1.4% from 1.2%. New job openings, as reflected by the Job Opening and Labor Turnover Survey, hit an all-time high. Unfortunately, most other economic indices showed slower growth. As expected, The Federal Open Market Committee raised rates by .25% to a range of 1% to 1.25% at the meeting that concluded on June 14th. This is the second rate increase this year (out of four meetings). Four more meetings are scheduled to be held this year, with the next meeting scheduled for July 25-26. Presently, no rate increase is expected.

Event Period Estimate Actual Prior Revised
Nonfarm Payroll May 182,000 138,000 211,000 174,000
Unemployment May 4.40% 4.30% 4.40%
ISM Manufacturing May 54.8 54.9 54.8
ISM Non-Manufacturing May 57.1 56.9 57.5
Retail Sales ex Auto & Gas May 0.30% 0.00% 0.30% 0.50%
PPI MOM May 0.00% 0.00% 0.50%
PPI MOM ex Food & Energy May 0.10% 0.30% 0.40%
PPI YOY May 2.30% 2.40% 2.50%
PPI YOY ex Food & Energy May 1.90% 2.10% 1.90%
CPI MOM May 0.00% -0.10% 0.20%
CPI MOM ex Food & Energy May 0.20% 0.10% 0.10%
CPI YOY May 2.00% 1.90% 2.20%
CPI YOY ex Food & Energy May 1.90% 1.70% 1.90%
Industrial Production May 0.20% 0.00% 1.00% 1.10%
Housing Starts May 1,220,000 1,092,000 1,172,000 1,156,000
Building Permits May 1,249,000 1,168,000 1,229,000 1,228,000
New Home Sales May 590,000 610,000 569,000 593,000
Existing Home Sales May 5,550,000 5,620,000 5,570,000 5,560,000
Leading Index May 0.30% 0.30% 0.30% 0.20%
Durable Goods Orders May (P) -0.60% -1.10% -0.80% -0.90%
S&P CoreLogic CS 20-City YOY Apr 5.90% 5.67% 5.89% 5.88%
Personal Income May 0.30% 0.40% 0.40% 0.30%
Personal Spending May 0.10% 0.10% 0.40%
GDP Annualized QOQ 1Q (T) 1.20% 1.40% 1.20%
Univ. of Mich. Sentiment Jun (F) 94.5 95.1 94.5
F = Final, P = Preliminary, T = Third
Source: Bloomberg

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