The S&P 500 Index traded in a range over the past week, as strong growth in the U.S. services sector was countered by newly released minutes from the Federal Reserve Board’s last meeting, which revealed conflicting opinions among Fed officials about the economy’s health. The government reported that employers added 287,000 workers in June, a strong rebound from a disappointing May report (38,000 jobs added). The June report showed the largest single monthly job gains since October 2015.

In a meeting held before the U.K.’s June 23 Brexit referendum, Fed policy makers kept a key short-term interest rate steady as uncertainty about the labor market and financial stability threatened to derail their economic outlook. Before the UK vote, according to Federal Funds Futures, the probability of a Fed rate hike by the end of 2016 was 44 percent. Now, post-Brexit, that probability has fallen to just 12 percent.

Investor speculation that central banks would work to limit any Brexit-related fallout helped equities around the world recoup much of the losses they experienced immediately after the Brexit vote. However, equity market declines have resumed as the early signs of stress have re-appeared

Jittery markets and the falling likelihood of a Fed rate hike have spurred strong investor demand for government-backed fixed-income securities, causing yields on U.S. Treasuries to plummet to unprecedented levels. Early last week, for example, the yield on the benchmark 10-year Treasury note fell to an all-time low of 1.37 percent.

GAIN: Active Asset Allocation

Domestic equities have performed well relative to international markets recently. Horizon’s equity portfolios continue to emphasize U.S. stocks over international shares.

In general, our equity outlook remains bullish based on improvements in various market indicators that occurred once investors digested the surprising result of the Brexit vote. That said, with earnings season beginning in the next few weeks, it is possible that daily market volatility could rise somewhat based on companies’ second-quarter financial results.

In the fixed-income portfolios, we continue to favor the relatively attractive yields on corporate bonds in an environment characterized by low interest rates that keep falling. Although such bonds can experience volatility when equities come under pressure, corporate credit has remained healthy and the relatively high yields have generated investor demand.

SPEND: Real Spend

Real Spend models were rebalanced at the end of the quarter to their neutral (i.e., original) allocations. This rebalance (which we call “intelligent rebalance”) uses gains from the portfolio to replenish the more liquid spending reserve. This process reset the Real Spend spending reserve to what we believe is the optimal allocation to balance distribution needs with long-term growth.