Economic data coming out of the U.S. last week was disappointing. Initial jobless claims were higher than expected, while we saw lower-than-expected results from the University of Michigan’s consumer sentiment index, the consumer price index and wholesale inventories. Overseas economies also struggled, with retail sales in Brazil, CPI in China, and industrial production in the UK and France all disappointing. One bright spot: Economic data from Japan was better than expected, with higher core machine orders and producer prices.

Equities posted gains for the week, with U.S. energy stocks outperforming on expectations for strong first-quarter earnings. Technology stocks also outperformed in anticipation of strong earnings results. However, interest-rate-sensitive sectors (such as utilities and REITs) underperformed as interest rates rose during the week.

Internationally, resource-focused sectors like energy and materials outperformed due to strength in commodity prices. European equities also outperformed, continuing their recent trend as investors seek a relative safe haven from the U.S./China trade dispute. But Japanese equities underperformed, as investors worried about potential fallout from the trade tensions between the U.S. and China.

In the fixed-income markets, long-duration Treasuries were the worst performers as interest rates rose last week (because longer-duration bonds are more sensitive to changes in interest rates than are shorter-duration securities). Emerging markets bonds outperformed as investors became more confident that stronger economic growth in emerging markets is sustainable.

GAIN: Active Asset Allocation

Global equities rose for the week, with U.S. stocks outperforming foreign shares. Within the U.S. market, growth topped value. Our high-momentum position rebounded, while our emerging markets position lagged.

Bond prices fell modestly last week, as investors favored stocks and other risk assets. The one exception: High-yield bonds, which outperformed the broader bond market.

PROTECT: Risk Assist

Expectations for future market volatility fell sharply last week, as investors became less worried about the possibility of a military strike against Syria (as well as other issues). The Risk Assist portfolios remain modestly de-risked, as they have been since early February, and the portfolios have avoided being whipsawed by the recent market volatility thus far.

SPEND: Real Spend

Bond yields across the curve rose last week, pushing bond prices lower, as investors took a more risk-on positioning. The return spread between global stocks and broad-based bonds was more than 2% for the week, in stocks’ favor. On a trailing one-year basis, that spread is currently more than 17%—even in the wake of the elevated equity volatility recently.

Inflation data, as measured by the Consumer Price Index, was slightly weaker than economists’ expectations. However, the rate of increase in the CPI was higher than it has been in recent months—at 2.4% on a year-over-year basis. Meanwhile, core CPI (which ignores the volatile food and energy segments of the index) hit a 13-month high of 2.1%—in line with expectations. Although the CPI is an important inflation gauge, remember that the Fed’s preferred inflation measure is the PCE—which rose by just 1.6% (year-over-year) in February.

Yield-focused investors benefited last week. Master limited partnerships were up more than 3%, driven largely by rising oil prices, and high-yield bonds gained more than 1%. That said, REITs were down more than 1% as yields rose.

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