April market review

May 14, 2015

Shortly after the end of each month, our Chief Investment Strategist David Klassen provides highlights of the market and our funds’ performance. Following is a summarized review of April —

Markets

  • Global financial markets posted mixed performance for April. Global equity markets posted gains for the month, despite posting sharp declines into month-end. The S&P 500, which tracks domestic large cap stocks, was up 0.96% in April and is up 1.92% year-to-date (YTD). The Russell 2000 Index, which tracks domestic small cap stocks, was down 2.55% in April but is up 1.65% YTD.
  • International equity markets were up for the month of April. The international developed equity index (MSCI EAFE) was up 4.08% for the month and up 9.16% YTD. The emerging markets index (MSCI EM) was also up 7.69% in April and up 10.10% YTD. The Japanese Index (Nikkei 225) returned 1.63% in April and is up 11.86% YTD. The US Dollar declined against most currencies.
  • In April, US fixed income yields increased (and prices decreased) across the curve. The 30-year bond yield increased 20bps, the 10-year increased 11bps, while the 5-year increased by 6bps. The Federal Reserve again left the overnight lending rate unchanged at 0-0.25%.
  • Corporate bond prices decreased in April, with the Barclays Aggregate Index down 0.36% in April but up 1.24% YTD. The Credit Suisse Leveraged Loans Index (bank loans) was up 0.90% for April and up 2.96% YTD.

Economic & Geopolitical Headlines

  • The US economy slowed to a crawl at the start of the year, its weakest performance in a year, according to an advanced estimate released by the Bureau of Economic Analysis. The US economy, measured by real gross domestic product (GDP), increased at an annual rate of 0.2% in the first quarter of 2015, following annual growth rates of 5.0% and 2.2% in the third and fourth quarters respectively in 2014.
  • The Federal Open Market Committee is maintaining its current policy. The committee anticipates that it will be appropriate to increase rates when it has seen further improvement in the labor market and is confident that inflation has moved back to its 2% objective.
  • Economic activity in the manufacturing sector continued expansion in April at the same pace as March, with a reading of 51.5, according to the Institute for Supply Management (ISM), below expectations of 52.0. A reading above 50 is considered economic expansion.
  • US job growth rebounded in April after a weak March report. The Labor Department reported a total nonfarm payroll employment increase of 223,000 in April. February was revised up marginally from 264,000 to 266,000, but the change for March was revised down from 126,000 to 85,000. With these revisions, employment gains in February and March combined were 39,000 lower than previously reported. In April, the unemployment rate ticked down slightly to 5.4 percent. Over the past three months, job gains have averaged 191,000 per month.
 
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