*by Kevin Slater, CEO, Lead Advisor, CFP®*

In the face of increased interest rates and concerns about a recession, all the equity markets and the US bond market are up for the year!

The bond market began the year in denial about the FED’s commitment to fight inflation by way of ongoing interest rate hikes. As more bond investors became FED believers, returns in the bond market have fallen but still remains positive. The great news for investors is that your Fixed Income investments are paying far higher interest rates than they have in years. We extended duration somewhat in portfolios but remain well below the index. We anticipate another round of trades this fall once we feel the FED is at the end of hiking.

US equity markets are all up more than expected. A large portion of the gains have come from a handful of companies who are expected to most benefit from developments in Artificial Intelligence. While we are certainly at the forefront of major change, we have no idea which companies will be the long term winners and therefore anticipate a great deal of volatility among “AI related” companies. Much of the rest of the US equity market is also positive, albeit not to same degree, due to US consumer spending.

International equity markets have also done well. The US dollar has fallen against other major currencies which helps returns. Interestingly, performance in developed markets has been driven by traditional value companies as opposed to technology companies.