Equity investors overlooked President Trump's withdrawal from the Iran nuclear accord and pushed stocks higher. Energy prices rose with increased tensions, with Brent crude oil prices hitting $77 a barrel. A subdued inflation reading Thursday added confidence that the Fed won't accelerate interest rate hikes.

Weekly Returns

S&P 500: 2,728 (+2.4%)
FTSE All-World ex-US (VEU): (+1.3%)
US 10 Year Treasury Yield: 2.97% (+0.02%)
Gold: $1,319 (+0.3%)
EUR/USD: $1.194 (-0.2 %)

Major Events

Our Take

In last week's policy statement, the Fed appeared to strive to make very few changes to its previous outlook. That, coupled with this week's subdued inflation report, suggests the most likely path forward is for two additional rate hikes this year, not three.

So far this year, stocks are up a little and bonds are down a little. Of course no one buys bonds to lose money, but recent developments should be encouraging to owners of bonds. Rates are higher than they were in the beginning of the year and that makes bonds more attractive on a forward-looking basis. Equity volatility has retreated after spiking in February and March, but it feels unlikely it will go into complete hibernation as it did in 2017. The right long term mix of stocks and bonds remains the most important decision most investors make and we recommend not losing faith in bonds because of low single digit losses over a few months' period.