The week ended with positive movement in talks between President Trump and Chinese President Xi as the U.S. agreed to hold off on additional tariffs and China agreed to buy U.S. farm goods. Trump also consented to lightening restrictions on U.S. transactions with Chinese tech company Huawei. The two sides agreed to continue negotiations at a future date. Relations between the U.S. and Iran deteriorated further this week as the Trump administration ordered new sanctions to freeze the personal assets of Supreme Leader Ali Khamenei and key Iranian military leaders. Meanwhile, Congress passed a bill to increase funding for the growing number of children in U.S. custody at the border.
While the S&P 500 ended the week slightly down, the year-to-date returns of 18.3% mark the highest return in the first half of a year since 1997. Small cap stocks had a nice bounce last week as investors anticipated an easing in the trade standoff between U.S. and China. International stocks provided strong first half returns with growth stocks outpacing value funds. Yields remained low with the market pricing in an expected rate cut when the Fed meets at the end of July. Bond funds across the board – with the exception of floating rate – provided above average year-to-date and one year returns.
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