Although the S&P 500 began to show some volatility near the end of the 2nd quarter, the index still posted solid gains. For the quarter, it was up 2.91% on a total return basis. And at the end of the 2nd quarter, the posted total return number was 13.82% for the year.
As I’ve been discussing in a lot of my research, interest rates are going higher. This fact appears to be the main cause of the market’s volatility. However, it does appear that short-term rates are staying low and the rise in rates is focused more on the long-end of the curve. This has the effect of steepening the yield curve, which generally signals a healthy economy.
Time will tell on how all these moving pieces will shake out, but for now the markets are posting nice gains and the yield curve is getting steeper and, perhaps, more “normal.”
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