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Monthly Market Monitor - June 2011

Market Indices1JuneYear-to-Date
S&P 500-1.67%+6.02%
MSCI EAFE-1.23%+5.35%
MSCI Emerging Markets-1.50%+1.03%
Barclays U.S. Aggregate Bond-0.29%+2.72%
Barclays Municipal+0.35%+4.42%
Barclays US Corporate High Yield-0.97%+4.97%



June was a difficult month for markets across the board. Equity markets continued May's decline, and fixed income markets were challenged as well. While Japan showed signs of recovery (off an admittedly low base), uncertainty in the U.S., Eurozone, North Africa, Middle East and Latin America plagued all markets. Concerns regarding the European Union's sovereign debt issues and implications for the Euro mounted, with all eyes on Greece. Investors were cautious as economic indicators reflected the cumulative effects of beyond-target inflation, disappointing economic reports, and U.S. unemployment at 9.1%.

Domestically, concerns over persistently high unemployment, falling consumer confidence and disappointing economic numbers were reflected in the equity markets. The S&P 500 index saw another month of negative returns, down -1.67% for the period, and while the traditionally defensive Utilities and Healthcare sectors were the least hard hit, not one of the ten GIC sectors was immune to the pullback

Non-U.S. developed equities experienced deeper pullbacks than the U.S. through most of June, but recovered a large part of the month's pullback in the last week as Greece showed signs of progress toward resolution. In June, Prime Minister George Papandreou won a confidence vote and the Greek parliament voted to approve deeper austerity measures required for a second payment out of last year's bailout aid package. In the last few trading days of the quarter, investors seemed to gain confidence that the European Union will not allow the Euro to fail. Overall, the MSCI EAFE index fell by -1.23%, giving back some of the gains of the first quarter but still maintaining a positive +5.35% return YTD.

Civil unrest in North Africa and the Middle East continues to escalate. In Libya, the movement to remove Muammar Muhammad al-Gaddafi from power virtually halted oil production, removing a significant portion of the global supply of light sweet crude. In the third week of June, the International Energy Agency, a 28-member nation group of which the U.S. is a participant, announced that it would take measures to buttress the global supply of oil by releasing 60 million barrels of crude from their emergency supplies per day over 30 days. Of the 60 million, 50%, 30 million barrels, will be provided by the U.S. from its 727 million barrel Strategic Petroleum Reserve (SPR). While this represents less than one day's consumption, it is also its largest ever emergency release. Europe will supply another 30% in crude and refined products, with the balance provided by Pacific OECD nations. The price of crude initially fell, but rose back to pre-emergency-release levels by quarter end. The MSCI Emerging Markets index posted a -1.50% loss, continuing the decline we saw in May, but still maintaining a positive +1.03% return YTD.

Core investment-grade U.S. bonds, as measured by the Barclays U.S. Aggregate Bond index, posted a slight -0.29% loss in June, reversing monthly increases in both April and May, but still finishing up +2.29% for the second quarter and up +2.72% YTD. The Barclays U.S. Corporate High Yield Index lost -0.97% in June, reversing the monthly uptrend in both April and May, but also still finishing up +1.05% for the second quarter and up a respectable +4.97% YTD.

Municipal bonds were the month's only gainers, returning a modest but positive +0.35% for the month, as measured by Barclays Municipal Index, extending the positive uptrend we saw in April and May to finish the quarter up +3.89% and up +4.42% YTD.

  1. Morningstar Direct

Prepared by:Suehyun Kim, Director, Investment Research, Cetera Financial Group

This information is compiled by Cetera Financial Group. No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

Securities and insurance products are offered by PrimeVest Financial Services, Inc., a registered broker-dealer. Member FINRA/SIPC. PrimeVest Financial Services is unaffiliated with the financial institution where investment services are offered. Investment products are: * Not FDIC/NCUSIF insured * May lose value * Not financial institution guaranteed * Not a deposit * Not insured by any federal government agency.

All economic and performance information is historical and not indicative of future results. The market indices discussed are unmanaged. Investors cannot directly invest in unmanaged indices. Please consult your financial advisor for more information.

Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards.