This piece is approved to use with clients.
A Macro View - The Unending Brexit Drama
Chart of the Week
- Federal Reserve Chair Jerome Powell testified before Congress during the week and indicated the FOMC would hold rates steady through the end of the year. He expressed confidence that the three rate cuts implemented since July, to the range between 1.50% and 1.75%, would bolster the economy in the face of uncertainty. Mr. Powell cited both the ongoing trade dispute between the US and China and a global economic slowdown as the primary headwinds to the US economy.
- Retail sales rose 0.3% during October, adjusted for seasonality, as the US consumer remains a driving force in the economy. The increase in spending is a welcome reversal from September, when consumer spending dropped 0.3%. Retail sales were up 3.1% through the first ten months of the year compared with a year earlier. Retail sales have held up well in the US despite continued uncertainty from global trade tensions and a slowdown in the manufacturing sector.
- Major economies from around the globe showed weakness recently. In China, growth slowed further in October as the trade war with the US started to bite. Consumer spending and manufacturing in the country slowed during the month. Meanwhile, the Japanese economy slowed significantly in the third quarter, expanding at a rate of just 0.2%, compared with a 1.8% expansion in the previous quarter. Germany narrowly avoided a recession, as it recorded a 0.3% expansion during the third quarter, after a 1.0% contraction in the prior quarter.
- Stocks in the US were up slightly for the week. Large cap stocks outperformed their small cap counterparts. Meanwhile, value stocks underperformed growth stocks.
- Short-dated Treasury yields (six months and shorter) fell slightly during the week, while longer–dated Treasury yields fell. Treasurys dated from five to 30 years fell around 10 basis points, leading to a flattening of the yield curve.
- Developed markets stocks also saw slight weakness during the week and underperformed US stocks. Growth stocks outperformed value stocks in developed markets. Emerging markets stocks fell, declining by 2% during the week.
- Volatility was up in markets, as measured by the VIX, which increased more than 7% during the week.
- Commodity prices were largely lower for the week, led by crude oil, as OPEC indicated it was planning to maintain curbs on crude output throughout next year but would hold off on more aggressive cuts.
This report is available as a PDF. To read the full report click the button above to open the report.