Weekend Economists Celebrate Endless Summer August 29-September 1, 2014

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64. Stocks Rally With Bonds in August on Global Stimulus Bets

http://www.bloomberg.com/news/2014-08-29/stocks-rally-with-bonds-in-august-on-global-stimulus-bets.html

Global stocks rallied with Treasuries and European yields tumbled in August as investors bet central banks will continue to underpin global economies. Escalating violence in Ukraine sent the ruble plunging to a record low while gold advanced.

The MSCI All-Country World Index jumped 2 percent for the month and the Standard & Poor’s 500 Index surged 3.8 percent, giving both gauges the best performance since February. Ten-year Treasury yields dropped 21 basis points, the most since January, while rates on similar-maturity bonds from Italy to Spain and Germany touched record lows. The MSCI Emerging Markets Index capped its longest streak of monthly gains since 2005. Volatility eased despite global conflicts, as the VIX plunged 29 percent, the biggest drop in more than two years.

“The S&P and other indexes have ground higher this month in the face of all the global turmoil and macro issues that still exist,” Peter Tuz, who helps manage more than $450 million as president of Chase Investment Counsel Corp. in Charlottesville, Virginia, said in a phone interview. “It’s been driven by the strong results U.S. companies have achieved in the second quarter, and the positive economic data we’ve seen. It looks like global quantitative easing could last longer than expected.”

More than $1 trillion was added to the value of global equities in August, sending it to a record $66.2 trillion. The S&P 500 rebounded after slipping to a two-month low on Aug. 7, climbing to erase the 3.9 percent drop that began on July 24, as concern over crises from Ukraine to Iraq and Argentina eased.