Presented by Mark Gallagher

General market news

• After being as high as 2.39 percent, the yield on the 10-year Treasury moved lower late last week, opening at 2.30 percent on Monday. Some weaker-than-expected economic data, combined with what seemed to be more dovish comments from Federal Reserve (Fed) Chair Janet Yellen, helped push rates lower. The 30-year yield remains below 3 percent at 2.89 percent, and the 2-year is back below 1.4 percent, the lowest it has been since 2009.
• The Nasdaq Composite regained its leadership position last week following a post-July 4 slump. It led the three major U.S. indices with a gain of 2.59 percent. The S&P 500 and Dow Jones Industrial Average gained 1.42 percent and 1.04 percent, respectively. Markets reacted positively to Yellen’s semiannual testimony before Congress and her remarks that lower levels of inflation may lead the Fed to raise rates more slowly in the future.
• The technology and energy sectors performed best on the week. Technology benefited from the Fed’s pro-growth stance, while energy benefited as oil prices recovered to $46.35 per barrel. The worst-performing sectors were telecom and financials. Despite beating earnings estimates, big bank stocks JPMorgan Chase, Wells Fargo, and Citigroup all fell. A lower net interest income forecast from JPMorgan, a revenue miss for Wells Fargo, and lower net income for Citigroup were seen as reasons for the decline. As earnings season shifts into high gear this week, we could see an increase in market volatility.
• In economic news, we saw a number of data points surrounding inflation last week. On Thursday, Producer Price Index data came in slightly weaker than expected. The core figure, which excludes more volatile energy and food prices, increased 0.1 percent against expectations of a 0.3-percent gain. Year-over-year, prices have increased 1.9 percent against expectations for 2.1-percent growth. On Friday, Consumer Price Index data also came in slightly weaker than expected. Core prices grew 0.1 percent month-over-month against expectations for 0.2-percent growth. Year-over-year, this measure remained at 1.7 percent.
• Retail sales data for June also came in worse than expected despite continued high levels of confidence. Both the headline and core figures disappointed, declining slightly against expectations for modest growth. Continued consumer optimism has failed to translate into consistent sales growth, so this measure will bear watching.

Source: Bloomberg

Source: Morningstar Direct

What to look forward to
This week is a quiet one for economic news, with only housing data on tap.

On Tuesday, the National Association of Home Builders industry confidence survey will be released. It’s expected to increase from 67 to 68. This is a very high level of confidence, not far off the 12-year high of 71 set in March of this year. If it comes in as expected, the result would suggest that industry confidence continues to be supported by low levels of available inventory and high demand.

Housing starts, released on Wednesday, are expected to ratify that confidence, rising from 1.092 million in May to 1.18 million in June. This would represent only a partial rebound from the drop in May, but there is some downside risk, as building permit issuance has declined recently. Housing starts are actually down on a year-to-year basis, so a significant bounce back would be a positive indicator for the economy as a whole.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg Barclays US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg Barclays US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg Barclays US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million.

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Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.

Authored by the Investment Research team at Commonwealth Financial Network.

© 2017 Commonwealth Financial Network®

Presented by Mark Gallagher

Mixed returns in June cap strong second quarter
U.S. markets led the way in June. Large-cap equities did well even as technology stocks ran into turbulence. The Dow Jones Industrial Average and S&P 500 Index posted solid gains of 1.74 percent and 0.62 percent, respectively. But the Nasdaq suffered from weakness in technology and finished the month down 0.87 percent.

Quarterly results were better. The S&P 500 was up 3.09 percent, and the Dow gained 3.95 percent. Despite its slight pullback in June, the Nasdaq did best, climbing 4.16 percent. Year-to-date, the Dow and S&P 500 have risen a strong 9.34 percent and 9.35 percent, and the Nasdaq has gained an impressive 14.71 percent. The three indices remain strong on a technical basis as well. All remained above their 200-day moving averages for the quarter, ending the first half of 2017 near all-time highs.

Earnings growth continues to support the stock market. After strong earnings growth in the first quarter, the second quarter looks good, too. According to FactSet, as of June 30, the S&P 500’s estimated earnings growth rate for the second quarter is 6.6 percent. This figure is slightly lower than the number anticipated at the end of the first quarter but may be good enough to drive stocks higher. Analysts expect nine sectors to show earnings growth.

International equity markets experienced a similar month and quarter. The MSCI EAFE Index, which represents the stocks of developed markets, declined 0.18 percent in June. But it managed a total return of 6.12 percent for the quarter. The MSCI Emerging Markets Index fared better, posting a 1.07-percent return for the month and a 6.38-percent gain for the quarter. Year-to-date, the EAFE is up 13.81 percent, and emerging markets have soared 18.60 percent. Technicals have been healthy for the two major international indices as well. Both remained above their trend lines for the month and quarter.

The renewed earnings growth and a supportive economic environment have driven the strong market performance year-to-date. The current synchronized global economic expansion is the first since the financial crisis, and it should continue to support faster growth.

Results for fixed income markets were mixed. The Federal Reserve (Fed) interest rate increase—though expected—forced market adjustments. The Bloomberg Barclays Aggregate Bond Index declined 0.10 percent in June, as the rate on the 10-year Treasury rose from 2.21 percent at the beginning of June to 2.31 percent by month-end. Longer-term results were better. The index returned 1.45 percent for the second quarter and is up 2.27 percent year-to-date.

The Bloomberg Barclays U.S. Corporate High Yield Index performed better for the month, gaining 0.14 percent in June and 2.17 percent for the quarter. The high-yield market remains popular; spreads are near post-recession lows, supporting returns. Default rates are still below historical average levels.

Economic data supports growth
First-quarter gross domestic product growth (GDP) was stronger than the initial estimate. The figure was revised upward, to 1.4 percent, which is double the original 0.7-percent estimated rate.

Positive revisions to consumer consumption numbers were the major drivers of the improved GDP rate. Consumption rose from an initial estimate of 0.3-percent growth to a robust 1.1-percent increase. The revisions, as well as the recent trend of weak first quarters to be followed by stronger subsequent quarters, represent a good start to the year.

Second-quarter data is also looking positive. Consumer income and spending rose 0.4 percent in April, and the figures for March were revised upward. Solid job and wage growth engendered the good results.

Data toward the end of June was less positive. Income growth has been strong, but spending growth has declined to 0.1 percent. This is actually better than it looks. The drop was due to lower gas prices—an overall positive—and moderating auto sales, which is a continued adjustment down from very strong previous sales levels. Combined with the decline in inflation, these factors seem to indicate that the decrease in spending may not be a concern yet.

The May jobs report was also weak, with only 138,000 jobs created. This figure was well below expectations, although the unemployment rate fell to its lowest level in 16 years. The slowing pace of job growth may be due to a lack of qualified job seekers, not a lack of jobs. Indicators point to job growth picking up; so, again, this situation is not yet a concern.

Despite some weak data, the Fed remains positive about the outlook for the economy. It raised the federal funds rate 25 basis points at its June meeting. The increase was anticipated and largely interpreted as a sign of continued confidence.

Housing rebounds following a weak April
Perhaps the most encouraging data for the quarter came from the housing sector. Some results for May were stronger-than-expected and offset a slight slowdown in April. Existing home sales in May were up 1.1 percent, though analysts had forecast a decline. New home sales also increased by more than expected for the month. The upticks were notable given the low level of supply on the market—existing housing stock is at its lowest level since 1982. Supply is expected to remain tight.

Home builder confidence dropped unexpectedly in May, as did housing starts and building permits. These declines were of some concern—especially given the low levels of housing supply. They could indicate that building costs are increasing.

Healthy demand drove the strength in housing. The S&P/Case-Shiller U.S. National Home Price Index showed that home prices had surpassed pre-recession highs (see Figure 1). Sales have continued to increase despite all-time highs in prices. This signals that many consumers are confident enough in the economy to make a long-term investment.

Figure 1. S&P Case-Shiller U.S. National Home Price Index, 2000−2017

Business and consumer sentiment still strong

The largely positive hard data reported in June was bolstered by continued strength in business and consumer sentiment. Business confidence remained high in May. This was reflected in the surprise increase in the ISM Manufacturing Index, which analysts had expected to remain flat.

Core durable goods orders, which are a proxy for business confidence, increased slightly during May. And although the ISM Non-Manufacturing Index was down for the same period, this measure is still in healthy expansionary territory.

Consumer confidence is still high, despite a small pullback in some surveys in June. The Conference Board Consumer Confidence Survey declined slightly, yet its three-month average is at the highest level since 2001. The high levels of confidence are providing a solid tailwind for continued growth.

Political risks remain

As has been the case for much of the year, politics continue to add uncertainty to the markets. The major domestic concern has been the Republican effort to reform heath care. To add to the uncertainty, the fate of wide-ranging tax reform is partially tied to the success of the administration’s health care efforts. Republican lawmakers are looking to use savings from health care reform to offset potential revenue losses from corporate and personal tax cuts. At this point, expectations are low, so the downside risk is probably low as well. There may be some upside potential if Congress is able to move forward.

Internationally, political risks remain. But given the better-than-expected results from recent European elections, these seem less pressing than earlier in the year. Progress has been made in dealing with economic issues. For example, the Italian banking system has started to resolve some of its problems. Market volatility could still arise from upcoming Italian election results and a worsening of the situation with North Korea.

Strong first half is a good sign for the rest of 2017

Risks remain and there have been signs of slowing growth, but the outlook for the U.S. economy is positive. High levels of confidence combined with increasing income and spending bode well for second-half growth. And, as growth speeds up in the rest of the world, the U.S. should benefit.

The positive outlook notwithstanding, we are bound to see volatility in the short and intermediate terms. A well-balanced portfolio designed to match objectives and hedge against the inevitability of less positive conditions in the future remains the best means to achieve financial goals.

All information according to Bloomberg, unless stated otherwise.

Disclosure: Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. It excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg Barclays government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities. The Bloomberg Barclays U.S. Corporate High Yield Index covers the USD-denominated, non-investment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.

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Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7^th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network^®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.

Authored by Brad McMillan, senior vice president, chief investment officer, and Sam Millette, fixed income analyst, at Commonwealth Financial Network^®.

© 2017 Commonwealth Financial Network^®

Presented by Mark Gallagher

General market news
• The yield on the 10-year Treasury opened at 2.23 percent early Tuesday after the long weekend, in line with where it opened last Monday. It seems that downward pressure has taken over in the last two weeks, as the 10-year yield hovers around 2.23 percent and has not been above 2.30 percent since May 17. The yield on the 30-year Treasury opened at 2.90 percent early Tuesday and has not been over 3 percent in two weeks.
• The theme of the week was “no news is good news,” as a break from political uncertainty in the headlines and continued positive earnings data helped lift all three major U.S. indices. In contrast with the previous week’s political concerns in the U.S. and Brazil, this week moved closer to the end of the earnings season and news of an upward revision in the Q1 gross domestic product (GDP) number. As of the end of the week, 477 of the S&P 500 companies had reported for Q1, and earnings are expected to increase 15.3 percent compared with Q1 2016. Looking at the ex-energy numbers, earnings are still expected to rise by 11 percent. Economic news was positive both here and in Europe. The second estimate of the Q1 2017 GDP number saw a revision from 0.7 to 1.2 percent growth, and the Purchasing Managers’ Index for the eurozone stayed at a six-year high. Finally, Moody’s downgraded China’s credit rating to A1, citing rising liabilities and weakening financial strength. Equity markets did not see much reaction to the news.
• Last week’s economic data saw mixed results. The week started on somewhat of a disappointing note, as both new homes and existing home sales came in below estimates. Specifically, new homes saw a decline of 11.4 percent month-over-month. Much of this slowdown can be attributed to lack of inventory. Durable goods orders for April were also lower than expected, as both headline and core figures were down month-over-month. This disappointing data indicates that increased business investment is unlikely to be a large driver of Q2 GDP growth and may even prove to be a slight headwind.
• On a brighter note, the second estimate for Q1 GDP growth surprised by increasing to 1.2 percent against expectations for a decline of 0.7 percent. This growth was largely attributed to increases in personal consumption and business investment, two areas that had shown notable weakness in initial estimates.

Source: Bloomberg

Source: Morningstar Direct

What to look forward to
We’ll get quite a bit of data in the week ahead, providing a good picture of whether the economy is accelerating—or not.

On Tuesday, personal income is expected to grow by 0.4 percent for April, up from 0.2 percent for March, on continued job and wage growth. Personal spending growth should also accelerate, from flat in March to 0.4 percent in April, as auto sales rebound. If these numbers come in as expected, this would be positive and suggest that consumers are spending again after a slow winter.

Also on Tuesday, the Conference Board Consumer Confidence Survey will give us a more forward-looking view of the consumer. Confidence is expected to decline slightly, from 120.3 to 119.9. This would still be close to a 16-year high and indicate an expanding economy.

On Thursday, the ISM Manufacturing Index is expected to drop back slightly as well, from 54.8 to 54.6. Again, this would leave it securely in expansion territory but suggest further acceleration is still to come. While U.S. manufacturing has benefited from higher global trade growth, that now appears to be slowing.

This trend should also be apparent in the international trade report, due on Friday, which is expected to show a small increase in the trade deficit, from $43.7 billion to $44.0 billion. There is downside risk to this report, however, on a rise in imports and a drop in manufactured exports. If so, trade will most likely be a drag on economic growth in the second quarter.

Finally, on Friday, the jobs report is expected to show an increase in jobs of 176,000 in May, which is a healthy level but down from 211,000 in April. The unemployment rate is expected to remain constant, at a low 4.4 percent, and wage growth to remain at 0.3 percent. Should this report meet expectations, it would indicate a continued trend in growth but, again, no acceleration.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg Barclays US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg Barclays US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg Barclays US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.

Authored by the Investment Research team at Commonwealth Financial Network.

© 2017 Commonwealth Financial Network®

Presented by Mark Gallagher

General market news
• The yield on the 10-year Treasury opened at 2.23 percent on Monday. This was up from last Thursday’s low of 2.17 percent but considerably lower than its recent high of 2.42 percent. The yield on the 30-year Treasury opened at 2.90 percent, down from 3.04 percent last week. The 2-year yield was at 1.28 percent, up from last week’s low of 1.22 percent but down from the recent high of 1.33 percent.
• All three major U.S. indices were down slightly for the week. The Nasdaq Composite declined the most, moving down by 0.55 percent, followed by 0.32-percent losses on the S&P 500 and Dow Jones Industrial Average. Volatility, which had been muted, returned last week. The CBOE Volatility Index (VIX) spiked to a high of 15.59 after being as low as 9.56 just a week earlier. Much of the volatility was driven by political uncertainty. Brazil has another presidential scandal on its hands. Michel Temer, who became president after Dilma Rousseff was impeached, is now under investigation by Brazil’s Supreme Court for bribery allegations. This news led Brazilian markets down by more than 10 percent. The U.S. also has its share of political uncertainty, as a special counsel has been appointed to investigate Russia’s interference in the 2016 presidential election and other improper contact with the Trump administration. This investigation will continue to take the wind out of the sails of the new administration’s efforts to pass tax and health-care reform.
• Last week’s economic news focused on the housing market, and it was largely disappointing. The week began on a bright note, with the National Association of Home Builders Housing Market Index coming in above expectations and rising near post-recession highs. This measure of home-builder sentiment is often seen as a leading indicator for the housing market, and increasing confidence bodes well for future growth.
• The good news ended there, however, as home-builder optimism failed to translate into faster construction. Housing starts and building permits data disappointed, as both measures decreased against expectations for modest gains. Although these decreases were surprising, strong homebuyer demand, low supply, and home-builder optimism indicate that this slowdown in starts and permits was likely temporary.

Source: Bloomberg

Source: Morningstar Direct

What to look forward to
This week offers a look at the housing market, what the Fed was thinking at its last meeting, and whether businesses are continuing to invest.

First up on Tuesday is the New Home Sales report. The report is expected to show a slight drop, from 621,000 sales in March to 615,000 in April, due to a limited supply of less expensive homes, which sell more quickly. Such a small decline, after strong gains in February and March, would not be a concern.

The Existing Home Sales report, released on Wednesday, is also expected to show a slight decline, from 5.71 million sales in March to 5.65 million in April. In this case, any decline would be due to a lack of supply. On a seasonally adjusted basis, the number of single-family homes for sale is at its lowest level since records started in 1982. There simply are not enough homes available for sale, despite strong demand. Here again, though, such a small decline would be nothing to worry about.

Also on Wednesday, the minutes from the Federal Open Market Committee’s last meeting will be released. Although these minutes are often out of date by the time they are released, there has been little public comment since the meeting, so they might provide useful guidance on the prospect of a June rate hike. In particular, we may learn whether officials are more concerned about the low unemployment rate or the drop in core inflation.

Finally, on Friday, we’ll see the Durable Goods Orders report for April. It is expected to show a 1.8-percent decline, after gaining 0.9 percent in March, on a sharp drop in commercial aircraft orders. Such orders are extremely volatile, so even if they decline, it will not necessarily be a bad indicator. Core orders, which exclude transportation, are expected to increase by 0.4 percent in April after a flat result in March. This is slower growth than in past months, but it would still be a healthy result.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg Barclays US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg Barclays US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg Barclays US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.

Authored by the Investment Research team at Commonwealth Financial Network.

© 2017 Commonwealth Financial Network®