After the biggest inflows for the last week, the SPY — SPDR S&P 500 ETFwas the biggest loser of the week with outflows of $2 billion and the same HYG — iShares iBoxx $ High Yield Corporate Bond ETF with lost of $688 million.

On the other hand, big inflows in the VTI — Vanguard Total Stock Market Index Fund, saw big inflows of $613 million, after came the QQQ — PowerShares QQQ Trust with $578 million and GLD — SPDR Gold Trust with $255 million.

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Macro in a nutshell

World stock indices traded in mixed trend this week. US indices were steady, the average European indices fell by 2.6% and the emerging countries rose by 1%, led by China and Brazil.

Government bond market went up. The yield on 10-year government bonds declined from the US to 1.85% — 1.7%. A similar trend was seen in the UK and Germany.

In general, the MSCI World index is trading 1.1% rise from the beginning of the Year. Government bond market rose this year, the yield on 10-year government bonds has declined from 2.27 US% to 1.7%

Major indicators released this week in the United States were involved, however, the addition of employees was very poor, about 38 thousand people, compared with expectations of 162 thousand employees,this figure significantly reduced the expected rise in interest rates and therefore weakened the dollar against a basket of currencies and led to weakening of a stock market. at the same time, labor force participation rate decreased and the unemployment rate decreased to 4.7%. ISM manufacturing was positive and higher than expected. wages increased yearly by 2.5%, in line with expectations. consumer spending rose at a higher rate of 1% in April 2016, more than expected, Negative data were published in the field of trade deficit, an increase resulting from an increase in imports, car sales were disappointing, and the publication of the Fed showed moderate growth in many areas.

Economic data released this week other world blocs were actually positive. Employment data and positive activity in Germany, the PMI higher than expected in the UK and Japan, production improvement. However, the OECD lowered its forecast of the average growth for the OECD countries from — 2.2% to — 1.8%

The price of oil has declined this week by 1.4%, the index of commodity prices rose 1.4% this week and an ounce of gold rose sharply by 2.6%. The dollar was down 1.6% against a basket of currencies and a decline of 2.3% against the euro.

Given the high level of pricing, moderation in the macroeconomic environment, the US rate hike expectations, forecasts a contraction in corporate profits and US geopolitical challenges aplenty, committed a re-examination of the portfolio and adjusting risk level.

There is of high importance to the balancing and selective choice of sectors. It is recommended to balance the investment mix by combining cyclical industries stocks, which are expected to benefit from growth, such as technology (QQQ) and Consumer Discretionary (XLY), alongside stocks from defensive industries like communication (VOX) health (XLV), and basic consumption (XLP).

In Europe (XSX6 GY) the priority is for the companies with high exposure to markets outside of Europe. Also, there is a priority to the major stock indexes over the medium and small.

Global bonds:


With the release of US employment data, which were particularly disappointing, sharp increases were recorded in the prices of government bonds at all maturities, however, the Fed continue to look at the positive data and expect a rate hike this year. The yield on the bond 10-year government the US is now about 1.7%. In Europe, the trend is also of rising prices and government bond yields to 10-years in Germany reached a record low of 0.06%. The government bond index in the Pacific (BPAC) rose 2.84% this week.

Corporate Bonds:

The positive sentiment in the government debt also affected the corporate debt market and the bonds at investment rating in the US and Europe posted gains of 0.91% and 0.31% respectively. The bonds at speculative rating recorded a more modest increase in the level of 0.12% and 0.25% respectively. However, It seems there is concern regarding the corporate market, which is reflected in the expansion of spreads between corporate bonds government bonds. Also, the bonds fear index recorded increases (the MOVE) and in the CDS indices.

Investment Strategy: It is recommended to focus on short and medium duration corporate bonds (which is less sensitive to changes compared ends of the curve). We emphasize that a high level of risk in the bonds is not suitable for everyone

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