During our last trend update, we wrote about trends starting to change in bonds. While US bonds have not maintained a clear direction for the past few months, we were pleased with the performance of emerging market debt and many actively managed funds. In a rather sudden series of events, many of the trends changed direction and turned negative resulting in several funds being sold off early last week.
We attribute this turnaround to a few factors:
1) Rising US Treasury yields.
2) Speculation that the Fed will reduce bond purchases.
3) Fed indications that it will raise rates if the economy continues to improve.
Real Estate has experienced a strong pullback over the last few weeks. Looking over the course of the last 10 months, it is still a positive trend. But this trend could be changing soon, like bonds have.