Risk Assets Continue to Rally Despite Geopolitical Tensions

• The Federal Open Market Committee (FOMC) decided to keep the target federal funds rate neutral over the quarter, however, the group outlined a plan to reduce the Fed’s treasury and agency holdings. The Fed will take a cautious approach to reducing the balance sheet over time. Risk assets rallied despite geopolitical tensions as investors embraced positive economic growth.
• Emerging market equities was the best performing sector over the quarter. Developed markets equities also posted strong returns as economic data and earnings expectations improved. A weaker U.S. dollar helped boost investor returns in international stocks. In the U.S., small-cap stocks outperformed large-caps on an improving outlook for tax reform.
• Fixed income posted positive performance as market participants anticipated a gradual pace for rate hikes. High yield and emerging market debt performed well as inflows continued from investors seeking higher yields.
• Energy-related assets rebounded over the quarter as oil prices moved higher on the back of OPEC’s supply cuts and the threat of Hurricane Harvey. Lower interest rates led to positive performance for REITS.

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

• 3Q17 Global Positioning Statement™
• 3Q17 Global Equity Review
• 3Q17 Taxable Fixed Income Review
• 3Q17 Tax Exempt Fixed Income Review
• 3Q17 Real Assets Review
• 3Q17 Private Equity Review