Market Perspectives (May 2011)

by Jim Baird on May 27, 2011

Executive Summary

  • Bond returns were generally positive in April, as declining long-term yields flattened the yield curve. Longer-term municipal bonds continued to recover from their fourth-quarter selloff.
  • Stocks were positive for the month as volatility eased. The falling Dollar boosted returns of international equities, precious metals, and other commodities.
  • The economic picture remains mixed, as overall growth in Q1 slipped and inflationary pressures – particularly in food and energy – increased.
  • Indications of labor market strength were mixed in April. Jobless claims rose unexpectedly, even as nonfarm payroll growth maintained a positive trend. The unemployment rate ticked back up to 9.0%.

Nothing is certain but death and taxes

It was Benjamin Franklin who conveyed the spirit of this idea in a letter to Jean-Baptiste Leroy back in 1789. Now, more than two hundred years later, the saying still rings true. Since the discussion of death is best left for a much different venue, this missive will focus on that second certainty in life (taxes), as well as one of the pressing “uncertainties” that exist today. Taxes, specifically, is a topic of timeliness from our collective personal experience, with the April 15 (which happened to be April 18 this year) tax deadline recently past. As many Americans pulled out their pocket books for Uncle Sam, it was a friendly reminder of what Franklin D. Roosevelt quipped was “the dues that we pay for the privileges of membership in an organized society.”

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