After a dicey April, stocks and bonds both saw gains sufficient to pull into the green for the quarter. And fixed income exposures now largely are in the green year-over-year. Both the trailing quarter and year saw stocks struggle at the beginning, only to pull higher by period end. The U.S. continues to lead the rest of the world as European stocks saw increasing pressures near quarter end on account of Continental political/fiscal matters.

U.S. Growth stocks extended a substantial lead over domestic Value names in the second quarter, expanding a historical gap. Meantime large-cap stocks soared above smaller names, which collectively fell in Q2. Outside the States, though small-cap stocks trailed over the prior three months, the outperformance of Value stocks abroad suggests heady Growth gains reflect a phenomenon unique to the U.S.

In fixed income, relative performance across duration and credit yet again reflects the challenge in timing shifts in interest rates. Those who had bet on a more rapid decrease in yields likely failed to see those wagers pay off. While not near the peaks set last October, yields have remained range-bound as investors have come to accept stickier inflation and have gained a general sense that longer-term yields may want to be higher than those we saw since the Great Financial Crisis.