July 2018
Hide Page Sections
Show Page Sections
National Non-Operating Observations
Overall macroeconomic conditions remained stable in June. U.S. employment, as measured by the monthly change in non-farm payrolls, continued the strong, consistent growth shown since early 2011 . The 4 percent unemployment rate was down from a high of nearly 10 percent in the aftermath of the 2008-09 financial crisis. U.S. policymakers have kept a keen eye on the overall employment picture and its corresponding impact on wage and price inflation, especially as the U.S. economy appears to be nearing full employment. The Federal Reserve has raised its benchmark interest rate two times in 2018, putting upward pressure on short-term rates. The Fed is expected to raise rates twice more before year end, and the next Federal Open Market Committee meeting is scheduled to end on August 1. Long-term interest rates, however, have not increased as much, and even decreased broadly from April to June. This has led to a broad flattening of the borrowing yield curve, with investors only demanding relatively small increases in yield for lending money for longer maturities.
†1Q 2018 Estimate
*60/40 Asset Allocation assumes 30% S&P 500, 20% MSCI World, 10% MSCI EM, 40% Barclays Agg.

June 2018
Month Over Month Change (bps)
Year Over Year Change (bps)

GDP Growth
Unemployment Rate
Personal Consumption Expenditures
30yr MMD
30yr Treasury
Monthly Return on 60/40 Asset Allocation*
Non-Operating Assets
World stock markets have rallied since the 2008-09 financial crisis and have shown strong, coordinated growth since the 2016 U.S. election. Interest rates across the world have also fallen to historic lows. Both these developments have been positive for equity and fixed income investment portfolios. Recent volatility in the U.S. and world stock markets, and gradual increases in long-term interest rates have put a damper on investment performance in 2018 to date. The S&P 500 index is up 1.7 percent year-to-date and the Barclays Agg Index is down 1.6 percent year-to-date. A stronger U.S. dollar has hit emerging markets hard, with exchange rates dropping and emerging market equities down 7.7 percent year-to-date (and down 4.6 percent in June alone). Strong earnings growth from U.S. companies has continued to support the overall stock market, but recent trade-limiting moves by the U.S., China, the E.U., and other major economies, could affect global supply chains and negatively affect earnings. Equity valuations remain high, but justifiable in light of economic prospects and unfavorable alternatives in the bond markets given the rising rate environment.
Long Term
Last Twelve Months
Long Term
Last Twelve Months
Non-Operating Liabilities
Capital markets borrowing levels, as approximated here by the “30-yr U.S. Treasury” and “30-yr MMD Index,” are dependent upon macroeconomic conditions, including inflation expectations, GDP growth, and investment opportunities elsewhere in the market. For June, the 30-yr U.S. Treasury decreased by 0.01 percent (ending at 2.99 percent) and the 30-yr MMD Index decreased by 0.07 percent (ending at 2.94 percent). Investment flows into and out of mutual funds directly impact the appetite and portfolio composition of long-term investors. Fund inflows generally are moderate and consistent over some time horizon. Fund outflows typically are large and sudden, as external events affect investor sentiment, resulting in the selling of bonds at lower prices and driving up of yields. Recent months have shown an oscillation between large or moderate inflows and small outflows, but May and June both saw sizeable positive net inflows of $736 million and $982 million, respectively.
Long Term
Last Twelve Months
Long Term
Last Twelve Months
National Observations
National Observations
©2018 Kaufman, Hall & Associates, LLC
Interested in more timely data and insight on hospital performance?
Sign up for a free trial today.
Become a subscriber
Annual subscription
Enterprise subscription
Receive our monthly reports
Your details
National Hospital Flash Report
Share article
Sign up now for access to the latest news and reports