Q2 2019 Market ChartBook

Q2 2019 Market ChartBook

Baird Private Wealth Management

June 30, 2019

Wealth Management | Capital Markets ? Investment Banking | Private Equity | Asset Management

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London

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Shanghai



Table of Contents

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Economy & Market

Market Highlights Markets at a Glance Returns by Asset Class S&P 500 Index Economic Growth Inflation Watch Jobs Market Corporate Profitability Market Volatility Commodity Markets Mutual Fund and ETF Flows

Domestic Equity

Equity Snapshot Asset Class Performance Sector Performance Investment Style Leadership Historical Market Valuations Mutual Fund Performance

International Equity

Global Performance Map Equity Snapshot Country Performance Sector Performance Investment Style Leadership Global Market Valuations Historical Market Valuations

Fixed Income

Bond Market Snapshot Maturity/Credit Performance Yield and Volatility U.S. Treasury Bonds Municipal Bonds Corporate Bond Yields Bonds Spreads Sector Yields & Returns Mutual Fund Performance

Economy and Markets

Q2 2019 Market ChartBook

Q2 2019 Market Highlights

Economy and Market

At a Glance: Equity markets were broadly higher last quarter despite the ongoing trade tensions and disappointing economic data. The S&P 500 returned 4.3% during the quarter and 18.5% for the year. The market rally was driven mostly by the prospect of a Fed rate cut next month. While equity markets celebrated the chance of easy monetary policy, the bond market exhibited pessimism. The yield curve has been inverted for over a quarter, indicating a higher probability of recession.

Economy: Recent economic data have been mixed. On the positive side, Q1 GDP grew at a solid rate of 3.1%, unemployment remains at a historic low of 3.6%, and core inflation is right on target. However, other areas of the economy are pointing to a slowdown. Monthly job gains have slowed to a 164k pace this year compared to 233k/month in 2018. More concerning, the May manufacturing PMI data hit its lowest level since 2009, and consumer confidence also declined to a two year low. The uncertainty surrounding the US and China trade talks likely contributed to the weaker data.

Fed Speak: The US Federal Reserve held rates steady in June at a target range of 2.25-2.5%. Fed Chair Jerome Powell indicated that the case for accommodative policy increased as the global economy slowed. Traders are pricing in a 100% chance of at least a 25 bps cut in July, with a 36% chance of a 50 bps cut. Powell also emphasized the Fed's independence even as President Trump reportedly considered demoting the Chair for the Fed's inaction this year.

Domestic Equity

Market Cap and Style: Markets were up across the board this quarter, with many of the trends in Q1 persisting into Q2. Growth equities added to their lead over value by nearly 1% on the quarter and 5% for the year. Mid-Cap Growth was the best performing style, up 5% QTD and 26% YTD. Small-Cap and Value equities have lagged so far this year, with Micro-Cap rising ................
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