August 2016 Flash Report

August was relatively quiet with market volatility nearing one-year lows. Investors focused their attention on central bankers and especially Janet Yellen’s signaling that the Fed might raise rates as early as September. Despite weak growth, inflation, and total employment data, the Fed seems intent on raising rates, perhaps to assist financial institutions or deflate expanding asset bubbles. Regardless, policy risks are increasing and with the VIX at 13 and forward equity multiples elevated, it’s no surprise that asset returns were muted in August.

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