Keep connected
Our investment management team is made up of engaged thought leaders. Get their latest commentary and stay informed of their frequent media interviews, all delivered to your inbox.
Stocks moved higher again in June to finish off a very strong second quarter and keep the bull market that began on March 23rd of last year intact. However, the substance of the recent rally was clearly different than what we’ve seen since last November. The value/cyclical/resource sectors have lead the stock market for most of this year, helping the Canadian market outpace the U.S. for only the second time in the past decade. But in the past month we have seen a return to the ‘high growth’ names, with the technology sector taking the lead once again, while financials, basic materials and industrials gave up big parts of their year-to-date gains. Oddly enough, this reversal in leadership took place even though the U.S. Federal Reserve, at their June meeting, acknowledged the recent strength in the U.S. economy, the rise in short-term inflationary pressures and ‘hinted’ that their first interest rate hikes might come earlier than 2023, as previously stated. Despite this slight increase in ‘hawkish’ views by the world’s most important central bank, bond prices rose as the 10-year government bond yield continuing to fall from its peak of 1.75% just two months ago to a recent low of 1.45%. The perplexing rally in bonds came at a time when inflation and economic growth each hit 13-year highs! So, while the ‘Fed’ was a bit more hawkish in their commentary after the meeting, they still support the notion of continued monetary ease on the premise that the current surge in inflation will be transitory and that employment levels remain far below ‘pre-pandemic’ levels and need to rise much further before this ‘easy money’ policy is reversed. Bottom line for now is that ‘the markets seem to be buying what the Fed is selling!’ (more…)