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The final month of the third quarter was positive for global stocks (+2.1%), which are now up 15.9% year-to-date. Bonds (-0.4%), on the other hand, fell slightly as yields ended the month on a higher note. Year-to-date, however, bonds have benefited from price appreciation and have returns of +6.4% (U.S.) and +10.0% (international). Alternative asset classes, REITs and commodities, moved higher, while managed futures gave back some gains. 

Economy

  • Inflation (Consumer Price Index) remained unchanged at +1.8% year-over-year.
  • The final estimate of second quarter Real GDP Growth came in at an annualized +2.0%, unchanged from the previous estimate.
  • Housing starts picked up by 12% to a 1.36 million-unit pace, the highest since June 2007. 

Stocks

  • U.S. stocks were buoyed by the energy, utilities, and financial sectors. Large value stocks (+3.7%) outperformed the broad large cap market (+1.9%), while small value also performed well (+4.9%).
  • A similar theme carried out in the international developed markets with large value being the leader (+4.8%).
  • Despite a strong return from South Korea (+7.2%), emerging markets (+1.7%) lagged developed markets.

Bonds

  • With the exception of short-term bonds, the slight rise in yields resulted in a modest pullback in U.S. intermediate (-0.4%), international (-0.4%), and inflation bonds (-1.4%).
  • In September, the Federal Reserve lowered the short-term rate to a range of 1.75-2.00%. 

Alternatives

  • Reinsurance (+1.7%), global REITs (+2.7%) and commodities (+1.2%) were positive while managed futures trended lower (-4.5%).

Economic and Market Commentary

Read our latest Economic and Market Commentary for Market Returns Year-To-Date, Market Returns Longer Term Annualized, Economic Indicators, and an Appendix.


Source: Morningstar. This is intended for informational purposes only and should not be construed as legal, investment or financial advice. Please consult your legal, investment and financial professionals regarding your specific circumstances.