As we near the end of July markets continue on their tear, today they were boosted by corporate earnings such as Caterpillar and McDonalds, who beat earnings expectations and showed evidence of growth elsewhere. US markets pressed higher, while other indications of growth included the growth in confidence in Europe, where Greece just extended a bond due 2019 to 2022 and saw solid demand. This mirrors strength in the Greek stock market which was up over 20% for the first half of 2017, along with other European peripherals, which also performed strongly.
Growth continues to outperform value notably this year, with the spread between the Russell 1000 Growth and Value indices now at over 1200 bps year to date. This has led portfolios with more balanced growth/value splits to turn in a middling return of 13%. This is a challenging time for value investors, as the strategy has languished more often than not in recent years, as markets are seizing on whatever evidence of growth they can find.
Fixed income saw some sell off today with bond yields rising to 2.3%, on the eve of the Fed report tomorrow. This boosted bank stocks, which have had a particularly strong month as the interest rate trajectory seems to be solidifying.