AdvisorShares Weekly Market Review

Highlights of the Prior week

For the week of June 10 – June 14

Stock Markets

The major indexes finished lower after experienced another volatile week.  While no major statements came out of the Federal Reserve, speculation about what the Fed chairman might after say its next meeting ends on June 19 drove a lot of market price movements early in the week.  Worries that the Fed was close to ending its aggressive bond buying program, drove markets lower on Tuesday and Wednesday.  On Thursday, markets rallied after jobless claims fell to 334,000 and May retail sales rose 0.6%.  In addition, auto sales rose 1.8% making it the largest gain since November 2012.  While these data points may convince the Fed that it can safely scale back its aggressive monetary policy, investors seemed to now be favoring good economic numbers over news that will cause the Fed to keep its foot on the gas.  On Friday, markets reacted negatively when the Thomson Reuters/University of Michigan consumer sentiment index fell for June, after reaching a six year high in May.  The Japanese market continued to be a cause of concern for investors worldwide, it had another volatile week and on Thursday the Nikkei declined 6.4% as the government’s pace and scope of economic reform failed to impress investors.

Bond Markets

US Treasury prices rose last week, in a sign that fixed income investors are becoming more confident that after it meeting ends on June 19, the Fed will announce that it plans to extend its aggressive monetary stimulus in attempt to halt a recent rise in long term rates.  While prices for Treasury inflation protected securities and municipal bonds fell, agency mortgage-backed securities rose in price after being out of favor for a while.  High yield bonds continued to fall in price.  While there has been no across the board weakening in fundamentals for companies issuing high yield debt, higher risk bonds have fallen out of favor and high yield bonds funds have faced large redemptions in the past few weeks.  Emerging market debt has also been hurt by increasing risk aversion, as well as continuing protests in Turkey.

Sources:

 *Indexes are from Reuters and Yahoo! Finance 4pm closing data

*Gold prices are from EcoWin and J.P. Morgan Asset Management

*Treasury rates are from Bloomberg.com

*Municipal and high yield rates are from Barclays Capital

*30 year mortgage rate comes from the Mortgage Bankers Association (MBA)

Past performance is not indicative of future results.

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