Market Commentary 
August was a good month for most markets, with domestic equities of all sizes posting strong results. Small caps rebounded after shedding 6% in July while large caps benefitted from leadership in defensive sectors. Emerging markets continued their recovery as Chinese shares appreciated, but European shares suffered from continued economic deceleration and geopolitical strife in the region. Fixed income benefitted from a continued decline in interest rates, as the declining yield on the 10yr US Treasury helped elevate bond prices. The 10yr Treasury declined to a 14-month low, but shorter-term interest rates continued in an uptrend that began last November, a sign the market is expecting the Fed to raise rates in 2015.
Market News
  • US corporate bond issuance is on pace to surpass $1 trillion by the end of Q3; corporations are taking advantage of low interest rates to secure long-term financing, much of which will fund domestic projects and further stimulate the economy (WSJ)
  • Kinder Morgan's (KMI) announcement to buyout external investors in its family of companies for $44 billion and convert from an MLP to a corporation is the largest deal in the energy sector behind Exxon's buyout of Mobil in 1999 (Financial Times)
  • The 10yr US Treasury appears to be trading more on macro concerns than economic fundamentals, as its yield has declined along with European sovereign yields throughout the year despite more stable and improving economic conditions
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Notes: 1) Sources: Bloomberg, J.P. Morgan Asset Management, Morningstar, Hedge Fund Research, Bureau of Labor Statistics, Bureau of Economic Analysis. 2) Data as of the date of this report unless otherwise noted. 3) U.S. GDP measures the percentage change during the referenced quarter as published by BEA. 4) Consumer Price Index for All Urban Consumers: U.S. City Average, All Items Less Food and Energy is based on 12-month percent change as published by BLS.

Disclosures: This material is provided for informational purposes only and does not constitute an offer or solicitation by HFS, or its subsidiaries or affiliates, to invest in these indices or their constituent products. The data contained herein are from referenced sources which HFS believes to be reliable. This information discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice. The views expressed are those of HFS. They are subject to change at any time. These views do not necessarily reflect the opinions of any other firm. Investing involves a high degree of risk, and all investors should carefully consider their investment objectives and the suitability of any investment. Past performance is not necessarily indicative of future results. All data is as of the date of this report unless otherwise noted.


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