Market Digest \u2013 Week Ending 7\/5\r\n\r\nThe major trends from the second quarter carried into the first week of the third quarter. US stocks outperformed international, with emerging markets faring the worst. A strong US jobs report released on Friday drove interest rates and the dollar higher, and led to further losses in gold and other rate sensitive assets.\r\n\r\nWeekly Returns:\r\n\r\nS&P 500: 1,632 (+1.6%)\r\nFTSE All-World ex-US: (+0.4%)\r\nUS 10 Year Treasury Yield: 2.73% (+0.24%)\r\nGold: $1,221 (-0.6%)\r\nUSD\/EUR: $1.283 (-1.4%)\r\n\r\nMajor Events:\r\n\r\n \tMonday \u2013 France and Germany demanded that Washington respond to reports the NSA spied on European institutions.\r\n \tMonday \u2013 The Institute for Supply Management\u2019s U.S. manufacturing index climbed to a three-month high of 50.9 from 49 in May, ahead of most expectations.\r\n \tTuesday \u2013 U.S. auto sales rose 9.2% year over year in June, the strongest rate in more than five years. Gains were driven by a surge in pickup truck demand.\r\n \tWednesday \u2013 Egypt's military ousted President Mohammed Morsi from office and replaced him with the head of the country's constitutional court.\r\n \tFriday \u2013 The Labor Department jobs report showed payrolls expanded by 195,000 workers, ahead of most expectations. The April and May numbers were revised upwards. The jobless rate stayed at 7.6%\r\n\r\nOur Take:\r\n\r\nFriday\u2019s jobs report provided a strong confirmation that the US economy is continuing to slowly grow. Predictably, stocks rose and bonds fell on the news. At this point, it will take a meaningful negative shock for the Fed to deviate from the stimulus reduction plan Bernanke laid out last month.\r\n\r\n10 Year Treasuries are now yielding 2.73% and 30 Year Treasuries are at 3.69%, up from 1.61% and 2.81% respectively at the beginning of May. While still low by historical standards, this rapid spike has yields feeling more \u201cnormal\u201d. The long term impact of the massive stimulus program won\u2019t be known for several years, but it is encouraging to see a potential return to traditional monetary policy accompanied by a growing economy and, for now, low inflation.\r\n\r\n30 year mortgage rates are now in the 4.4% range. While also low historically, this is up over 1% in a very short time and will take some wind out of the housing market\u2019s sails. Millions of families were able to take advantage of low rates and a dip in home prices to cut their monthly housing costs. Home price gains in recent quarters also helped many get out from underwater mortgages. At this point, for the economy as a whole, more stable prices would be healthy. It seems reasonable that is just what we might get.