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- Domestic equities extended their rally in August, nearing double-digit returns year to date. Small caps led the pack but continue to trail for the year.
- Developed international equities lost ground during the month for U.S.-based investors, as the dollar strengthened. This expanded the underperformance gap between international stocks and their domestic counterparts since January.
- Bonds rallied as the yield curve flattened in August. Short-term rates remained anchored by the fed funds rate, while the 10-year Treasury yield fell.
- Alternative investments were generally higher during the month; however, commodities trail both stocks and bonds for the year.
- U.S. economic data suggests a generally positive trend. The ECB recently announced additional stimulus efforts, while the Fed is on the cusp of wrapping up its QE3 program. The timing of the first rate hike remains a wild card for the capital markets.