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The first half of the year saw a turnaround in several indicators we watch. While bonds managed to outperform stocks in the first half, signs of improvement in the domestic economy are emerging. Our read of recent trends in the data gives us a basis for optimism on near-term growth. Overseas prospects are still fading, and growth rates are still coming down. Britain’s “exit” referendum poses challenges to Europe at a time when growth is already weak, for example. Our WCA Fundamental Conditions Barometer remains below 50, but is showing signs of improvement.

The “core” of portfolios were recently rebalanced to align with our long-run return forecasts. Tactical allocations within the “satellite” portions of portfolios saw an increase in equity weights, but equity exposure is still below neutral.

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