Third Quarter | 2014
The U.S. economy continued to show signs of progress this quarter. The labour market improved, inflation was subdued, and manufacturing and capital expenditures indicated that an expansion is likely underway. In response, the U.S. Federal Reserve continued to taper its asset purchase program and communicated its plans to cease this program as of October. Fear that a withdrawal of economic stimulus will cause higher bond yields has not materialized thus far, as yields have actually decreased during this period.
Second Quarter | 2014
The Q1 GDP data released in April seemed to indicate a stall in U.S. economic growth. Subsequent data revealed a much steeper economic contraction of 2.9%. Was this evidence that the U.S. economy was losing steam and requiring more aggressive intervention by the central bank? Or was this merely a statistical anomaly that was not indicative of the true state of the economy?
First Quarter | 2014
Global equity markets continued to rise during the first three months of 2014. This extends their rally to five years, with only periodic interruptions. One such interruption occurred when the political standoff between Russia and Ukraine prompted some investors to assess the implications of Russia’s aggression from the sidelines. The ensuing equity correction was relatively modest and short-lived, as global equity markets soon resumed their upward trajectory, with the MSCI World Index (C$) finishing the quarter with a 5.2% gain.
Fourth Quarter | 2013
Last quarter, U.S. Federal Reserve Chairman Ben Bernanke surprised markets when he announced that the Fed was not ready to taper their unprecedented level of monetary stimulus. Despite repeated signals to prepare for this outcome, the Fed ultimately concluded that the economy was not healthy enough to wean itself from this monthly injection of capital. Investors celebrated this extension as both bond and equity markets rallied on the news.