Market Perspectives (October 2012)

by Jim Baird on October 12, 2012

Executive Summary

  • Volatility fell during the quarter, as stocks posted solid returns.  Large companies outpaced smaller caps in the third quarter, widening their degree of year-to-date outperformance. 
  • Easing by central banks across the globe helped to boost international equity returns, particularly in emerging markets.  Reduced tensions also resulted in a declining U.S. dollar, creating a tailwind for U.S-based investors.  
  • High-quality bonds added to their modest gains in the third quarter, as Treasury yields held steady.  High-yield bonds once again were a beneficiary of investors searching for yield, as gains reached double digits year-to-date.   
  • The pace of economic growth remains disappointing, as second-quarter GDP was revised lower to just 1.3%.  Subpar growth, stable inflation expectations, and the lackluster jobs market prompted the Fed’s announcement of QE3.

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