The following is Sit Investment Associates' quarterly global outlook and strategy summary. This summary contains the collective opinions of our analysts and portfolio managers and is provided for informational purposes only. At the end of each calendar quarter, the full publication is available. While the information is accurate at the time of writing, such information is subject to change at any time without notice, and therefore, so may the investment decisions of Sit Investment Associates.

Global Outlook and Strategy

June 8, 2017

Although stock market volatility remains subdued, lower stock correlations and other late-cycle dynamics bode well for the outperformance of both growth and active management strategies going forward. 

Synchronized global growth, improving corporate earnings, benign inflation, and accommodative global monetary policy contributed to the solid performance of many U.S. and international equity indices in May. Global equities, led by strong European equity markets, outperformed U.S. equities in the month with the MSCI World Index returning +2.12 percent in the month as compared to the +1.41 percent  return for the S&P 500 Index. Following subdued economic growth of +1.2 percent in the first quarter of 2017, we believe U.S. real GDP growth is poised to accelerate to a quarter-over-quarter annualized rate of roughly +3.0 percent in the second quarter, driven by a rebound in consumer spending, buoyant private fixed investment, and a reduced drag from government expenditures.

The yield curve flattened during May with intermediate and longer term bond yields declining, as falling oil prices reduced inflation expectations and a lack of significant progress on tax reform tempered economic optimism. We expect the Fed to raise rates at the June 14th meeting as the low unemployment rate gives them the justification they need to maintain their glide path towards higher interest rates. The volume of municipal security issuances has been light this year and the light issuance is expected to persist through the summer and remain a positive technical factor for the municipal market this year. 

For more details, including a longer discussion on whether or not the positive reaction of the markets to the 2016 presidential election is over or will continue, please see Sit Investment Associates' April 2017 Global Investment Outlook and Strategy paper. Click here: Global Outlook and Strategy (Adobe Acrobat) or e-mail us at:


June 27, 2017

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