Positive Global Growth Leads to Risk-On Rally

• The Federal Open Market Committee (FOMC) decided to raise the target federal funds rate 25 basis points to the 1%-1.25% range in June for the second time this year. The committee views the recent slowing growth in economic activity as a transitory event with long-run targets unchanged. The FOMC also detailed their plan for balance sheet reduction. Economists are split on whether there will be another rate hike in 2017.
• In U.S. equities, growth continued to outperform value in the second quarter. Technology, health care, and discretionary sectors led the way, while utilities and REITs lagged. This was a tailwind for active managers. Over half (54%) of large-cap managers outperformed their benchmarks in the first half of the year for the first time since 2009.
• Fixed income finished the quarter positive despite a second rate hike from the Fed in June. With long run targets unchanged, long-term interest rates remained anchored as inflation and term premiums remain subdued. High yield and EM debt have been the strongest sectors within fixed income year-to-date.
• Energy-related assets plunged as the OPEC-led coalition did not include more supportive terms beyond what the market already expected in May. The continued increase in crude oil exports by US exploration and production companies was a key contributor to price pressure in the energy complex.

To view the Second Quarter Reports, click on the links below:

• 2Q17 Global Positioning Statement™
• 2Q17 Global Equity Review
• 2Q17 Taxable Fixed Income Review
• 2Q17 Tax Exempt Fixed Income Review
• 2Q17 Real Assets Review
• 2Q17 Private Equity Review