As we close out the fiscal year ending June 30, the markets overall appear healthy. Equity indices, domestic and global, are near all-time highs, corporate and high-yield spreads are approaching historic lows, and after a bout of indigestion in the first quarter of 2021, the risk-free interest rate markets have held steady. Corporate earnings are accelerating and will likely exceed the lofty levels of the first quarter at mid-year. While fiscal policy remains expansionary, as repairing America's infrastructure remains a goal of both parties, ideological disagreements remain in terms of content, size, and funding. Domestic economic data for the first six months of 2021 has maintained a positive trend, confirmed by first quarter U.S. GDP at 6.4 percent but, looking to the future, the economic “lift” may get heavier as the task of recovery transitions to generating consistent future growth while avoiding the negative short-term consequences of higher debt, deficits, and inflation.
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