July 2009 

Investment returns in July were quite positive, reflecting growing sentiment that the economy is beginning to show signs of stability. In many respects recent economic news has been simply ‘less bad' than feared, including second quarter corporate earnings that, on balance, were better than expected. The major equity indices returned 7.5-9.0% in July, continuing the significant advance from the market lows of March, 2009. The rally has been lead by the lower quality, more aggressive sectors of the market, including several areas that experienced the most severe declines last year and earlier this year. Within the fixed-income arena, US treasury yields were stable, though yields on corporate, municipal, and other non-treasury bonds, declined, and prices increased. In short, last year's' flight to quality', that accrued to the benefit of treasury securities and other lower risk investments, was unwound somewhat, in anticipation of the end of the recession and the beginning of an economic recovery.