The fixed income markets exhibited signs of a growth scare in July as inflation-adjusted, or real, yields fell over the month. The decline in real yields, along with lower inflation expectations and a flattening yield curve, all reflect the market’s downgraded assessment of future economic growth. Signs of growth picked up for the domestic economy over the second quarter of 2015 and, as a result, inflation expectations were on the rise throughout thequarter. Housing data were the standout, existing home sales in June moved to an annualized rate of 5.5 million, the highest since February 2007. Strongconsumer spending was another bright spot. Data released so far in the third quarter — such as a slowdown in retail sales figures and weak readings on wage growth — have been mixed and helped push inflation expectations down on the prospects of lower than anticipated growth…

Summer Growth Concerns