News

Stock and bond markets both rose during the quarter as signs of further stimulus from the Federal Reserve became more evident from comments during public appearances and media leaks that surfaced. We are not sure whether to be relieved that further quantitative easing is coming or to be worried that it is necessary. Within this backdrop, the S&P 500 rose 11.3% during the quarter bringing the year-to-date gain to 3.9%. The outlook for further Fed purchases of Treasury bonds forced yields down and prices up. The Barclays Aggregate bond index was up 2.5% for the quarter and almost 8% for the year. I recall saying in this letter earlier in the year that returns were going to be more difficult to generate in 2010 but balanced accounts are performing well. It is clear that this recovery is different and the need for additional stimulus is a significant development for the markets to consider.

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