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Investing Specialists

Economic Weakness: Is It Just the Weather?

Next week's data will provide some important clues.

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Most developed equity markets performed in a narrow range of 1%-2% weekly price increases while emerging markets continued to soar, this week up by another 4%. Emerging markets are up about 8% over the past two weeks, as fears that the U.S. Federal Reserve would quickly raise rates greatly diminished after last week's soft employment report. More stimulus and easing measures out of China a couple of weeks ago continue to stimulate interest in China and other emerging markets.

The U.S. equity markets had two good days this week and nothing the rest of the week. Like emerging markets, U.S. stocks rallied sharply on Monday on the reduced possibility of a June rate increase. Then the market sat around until Friday when a potential spin-off of  GE's (GE) financial division excited market participants. After a dip on Monday, the 10-year bond yield for the week rallied from 1.91% to 1.95%. Commodities also managed a small 0.8% increase as oil closed higher. Oil (WTI) was up 5% for the week to close over $51 on worries about the Iran nuclear deal being consummated.

Robert Johnson, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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