Market Perspectives (September 2012)

by Jim Baird on September 12, 2012

Executive Summary

  • As volatility remained relatively dormant in August, equities continued their advance.  Smaller companies led larger caps during the month, although large caps still lead the pack for the year.  International equities also rallied, aided by the falling Dollar for U.S.-based investors. 
  • High-quality bonds were virtually flat during the month, as the Treasury yield curve steepened modestly.  Inflation continued to slow in August, although rising food prices may lead to a reversal of that trend in the coming months. 
  • The economy grew at a lackluster pace of 1.7% in the second quarter, according to the second estimate from the Department of Commerce.
  • The employment market disappointed in August.  Job creation fell below expectations with just 96,000 new jobs added during the month.  More workers left the labor force in August, allowing the unemployment rate to ease to 8.1%. 
  • Continued weakness in job creation along with the slowing economy and limited inflation pressures are collectively raising expectations for additional easing by the Federal Reserve.

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