as of June 30, 2019
After a rough end to 2018, global stock markets continued their strong rebound during the quarter ended June 30, 2019. Central banks turned more dovish, and investors largely shrugged off U.S.-China trade tensions. All but one U.S. market sector produced gains, and stocks outside the United States were in positive territory for the quarter despite uncertainty over Brexit negotiations and slowing economic momentum. Overall, developed markets outperformed emerging markets.
Fixed income markets, as measured by the Bloomberg Barclays Global Aggregate Bond Index, returned 3.29% for the quarter. The Federal Reserve indicated it was unlikely to raise interest rates in 2019, and it signaled possible rate cuts this year. Despite concerns about Brexit, bonds outside the United States continued to benefit from fiscal stimulus in Italy and France as well the European Central Bank’s announcement that it expected to hold rates steady in 2019.
U.S. stock market
- The CRSP US Total Market Index, the benchmark for Vanguard Total Stock Market Index Fund, returned 4.08% for the quarter and 9.00% for the 12 months ended June 30. For the quarter, all but one of the fund’s industry sectors advanced, with financials, consumer services, and industrials producing the strongest returns. For the 12 months, eight sectors advanced, with only basic materials and oil and gas losing ground.
International stock market
- Stocks outside the United States, while underperforming their U.S. counterparts, also advanced. The FTSE Global All Cap ex US Index, the benchmark for Vanguard Total International Stock Index Fund, returned 2.85% for the second quarter. European stocks performed best (up 4.49%, as measured by the FTSE Developed Europe All Cap Index), followed by the Pacific region. Emerging markets stocks were the weakest but were still positive for the quarter, returning 1.23%, as measured by the FTSE Emerging Index. For the 12 months ended June 30, non-U.S. stocks returned 0.50%.
U.S. bond market
- The overall U.S. fixed income market returned 3.15% for the quarter, as measured by the Bloomberg Barclays U.S. Aggregate Float Adjusted Index, the benchmark for Vanguard Total Bond Market Index Fund. Bond prices rose and yields fell as the Fed signaled its readiness to loosen monetary policy given the deteriorating global economic outlook.
- Corporate bonds, as measured by the Bloomberg Barclays U.S. Corporate Bond Index, returned 4.48%, while U.S. Treasuries, as measured by the Bloomberg Barclays U.S. Treasury Index, returned 3.01%.
- The yield of the benchmark 10-year Treasury note closed June at 2.01%, down from 2.86% a year earlier.
- Money market yields fell from 2.44% to 2.35% over the second quarter. Vanguard Federal Money Market Fund’s average weighted maturity on June 30 was 39 days. The fund maintained its high-quality portfolio and continued to benefit from broad diversification and low fees.