- Although volatility re-emerged in May, domestic equities extended their rally, ending the month higher. A strengthening dollar erased the modest local currency gains of international equities for U.S.-based investors.
- The yield curve steepened on concerns the Fed may begin tapering its asset purchases. Rising rates contributed to negative returns for bonds in May.
- Inflation surprised to the downside in April, as inflationary pressures remain below the Fed’s target.
- The employment market had mixed results in May. Job creation was generally in line with expectations, while the unemployment rate ticked fractionally higher. The combination of limited inflation concerns and elevated joblessness should leave the Fed ample room to maintain its accommodative stance.