US equity markets are at a crucial juncture. Slowing growth, financial stress and uncertainty are framing the investment backdrop as the second half of the year beckons.

A strong end to June on Friday, saw the S&P 500 retreat 3.3 per cent in the second quarter, with the benchmark up 8.3 per cent on the year, making it one of the better-performing global equity markets since January.

Meanwhile, US Treasuries are ending the second quarter with a total return of more than 3 per cent, according to the Barclays Treasury index. After touching a 65-year low of 1.45 per cent in May, the yield on 10-year notes is closing out June camped at about 1.65 per cent.

The question for investors as the second half of the year gets underway is whether bonds or equities are correctly priced and more importantly how they may react should macro economic fears subside or the Fed is compelled to launch a thrid round of quantitative easing, or QE3.