It was a volatile month for stocks. Fears about escalating US-China trade tensions sent the Broad US Stock Market Index down 2.50% or more on at least three occasions in August, the most in nearly eight years. Gold prices surged as investors sought a refuge from the selling. The yield on the two-year Treasury Note surpassed that of the ten-year for the first time since 2007. The S&P 500 Index still returned 18.34% YTD, and within a couple percent of July’s record close.
World Asset Classes
The MSCI All Country World Index returned negative 2.37% bringing year-to-date (YTD) returns on the benchmark to 13.80%. US stocks were the top performers, followed by international developed and emerging market equities, respectively. US crude prices were down 5%. Gold prices rallied 7.5%. Yields on ten-year government bonds closed at 1.50%, near the low end of their range.
US equities as measured by the S&P 500 Index returned negative 1.58%. For the one-year period, returns on the index were positive 2.92%. Looking back three years, returns on the US benchmark averaged 12.70%. Small caps underperformed large caps. Value stocks underperformed growth stocks marketwide.
International Developed Stocks
Developed markets outside the US as measured by the MSCI World-Ex USA Index returned negative 2.46%, underperforming the US and outperforming emerging markets. YTD returns on the international index were 10.47%. Small caps slightly outperformed large caps. Across large caps, growth outperformed value. Across small caps, growth underperformed value.
Emerging Markets Stocks
Emerging markets as measured by the MSCI Emerging Market Index returned negative 4.88%, bringing YTD returns on the emerging markets index down to positive 3.90%. Small caps underperformed large caps and growth outperformed value.
Real Estate Investment Trusts (REITs)
US REITs outperformed international REITs returning positive 2.37% versus positive 1.39%. Year to date, US REITs returned 21.35% versus 15.61% for non-US REITs.
The 10-year U.S. Treasury Bond closed at 1.50%, down from 2.02% last month. The 2-year Treasury bond closed at 1.51%. The U.S. 10-year and 2-year Treasury Bond spread inverted for the first time since 2007. Barclay’s US Government Bond Index returned 3.36% for the period and 8.56% YTD. Treasury inflation protected securities (TIPS) gained 2.38%, bringing YTD returns to 9.06%. Barclay’s municipal bond index returned 1.58% for the month and 7.61% YTD. Barclay’s US High Yield Corporate Bond Index added 0.40% for the period, bringing YTD returns on the index to 11.00%. Oil decreased to close at $55.07 from last month’s $58.01. Gold was up, closing at $1,532.60 from last month’s $1,426.30.
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