as of June 30, 2018
After tumbling over the first quarter of 2018, global stocks stayed in positive territory for the quarter ended June 30, 2018. U.S. stocks led the way, returning nearly 4% for the period and outpacing stocks in both emerging markets and non-U.S. developed markets.
The overall U.S. fixed income market, as measured by the Bloomberg Barclays U.S. Aggregate Bond Index, returned –0.16% for the second quarter after returning –1.46% for the first quarter. Yields rose and prices declined as investors remained concerned about the possibility of inflation and a more aggressive pace of interest rate increases by the Federal Reserve. (Bond yields and prices move in opposite directions.)
The Fed raised rates in June– for the seventh time since the current tightening cycle began– and signaled more hikes to come. Attention is now focused on the Fed's pace for the rest of 2018, with many analysts expecting no more than one additional increase.
U.S. bond market
- Corporate bonds, as measured by the Bloomberg Barclays U.S. Credit Index, returned –0.88%, while U.S. Treasuries, as measured by the Bloomberg Barclays U.S. Treasury Index, returned 0.10%.
- The yield of the benchmark 10-year Treasury note closed June at 2.86%, up from 2.30% a year earlier.
U.S. stock market
- U.S. stocks rose for the quarter.
- The CRSP U.S. Total Market Index, the benchmark for Vanguard Total Stock Market Index Fund, returned 3.91% for the quarter and 14.83% for the 12 months ended June 30. For the quarter, 7 of the fund's 11 industry sectors advanced, with information technology, consumer discretionary, energy, and health care contributing the most to results. For the 12 months, 10 sectors advanced, with IT consumer discretionary, financials, and health care contributing the most.
- Money market yields continued to rise. Vanguard Federal Money Market Fund’s average weighted maturity on June 30 was 48 days. The fund maintained its high-quality portfolio and continued to benefit from broad diversification and low fees.
International stock market
- International stocks overall trailed U.S. stocks for the second quarter, as stocks declined in all non-U.S. markets, both developed and emerging.
- The Spliced Emerging Markets Index fell –8.36% for the quarter because of rising interest rates and new concerns about a trade war. For the 12 months ended June 30, the index was up 6.53%.