All rights reserved. The midpoint of 1999 marks a record of solid equity returns and disappointing bond returns.
Stocks are buoyant on the strength of a solid U.S. economy and steadily growing earnings.
Bonds are shaky for similar reasons. Some investors fear that a strong economy must translate into higher inflation sooner or later. There are other indicators of leading inflation, like inflation-indexed Treasury debt that are telling a story of little risk of future inflation. Clearly, both markets can't be right, and the resolution of this conflict will determine the direction of future stock market moves. The fiscal year for most schools has drawn to a close and it is time to take stock before looking down the road.