Two key themes have driven financial markets in 2019: the drag on economic activity and risk assets from trade tensions (our “protectionist push” theme); and a dovish pivot by central banks that has supported the expansion (“stretching the cycle”). What lies ahead? We believe these two market drivers may be testing limits over the next year.
Equity markets rose again last week, as investors continued to focus on the positives. The possibility of more progress on the trade front, improved manufacturing readings, decent third-quarter earnings results and accelerating corporate deal activity all helped stocks to rise for a fifth straight week.
The US unemployment rate is worth singing about, with the widely followed and reported upon Household Survey Unemployment Rate (also known as U3) coming in at 3.6% in October, up ever so slightly from its 50-year low of 3.5% in September. For those who question how representative the Household Survey Unemployment Rate is of today’s US labor market, we would point you toward the less widely followed and reported upon but much more comprehensive U6 unemployment rate, also known as Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time For Economic Reasons, As A Percent Of All Civilian Labor Force Plus All Marginally Attached Workers.
U.S. Treasury yields rose sharply last week, led by longer maturities.1 Investors reacted to speculation that U.S./China tariffs may be rolled back, and Treasury yields made their biggest jump for the week on Thursday.
The domestic equity markets returned to a more risk-on posture from the more defensive tone of the previous month. Interest rates were cut for a third consecutive time, planned tariffs on Chinese goods were postponed, and Brexit was delayed for another three months.
Labor market seems in good health, earnings continue to beat expectations and a trade deal could occur in December.
Fidelity's Asset Allocation Research Team (AART) examines major themes in global financial markets and presents its investment outlook in this quarterly market update.
Every year, Northern Trust’s Capital Market Assumptions Working Group develops forward-looking, historically aware forecasts for global economic activity and financial market returns — which drive our five-year asset class return expectations and inform our asset allocation decisions. All of this comes together in the form of our long-term strategic asset class allocation suggestions, which are used by institutional and individual investors worldwide.
Equities finished higher for the fourth straight week, with the S&P 500 Index up 1.5% and most U.S. averages setting record highs. The biggest tailwinds included the de-escalation of U.S./China trade tensions, Fed accommodation, and earnings results that have not been as bad as expected. Health care, technology and industrials were the best-performing sectors for the week, while REITs, energy and consumer staples were the weakest.
Truth be told, we are not certain “uninvert” is even a word. A Google search for uninvert led us to the website Wiktionary and the definition in our headline above, while a search on the Merriam-Webster website informed us uninvert was not to be found in the world’s most famous dictionary.
Global central banks have delivered an unusual late-cycle dovish pivot this year – to extend an already-long economic expansion. The Fed’s rate cut last week was the latest installment of this dovish push.
U.S. Treasury yields declined last week, led by longer maturities.1 The Federal Reserve (Fed) cut interest rates by 25 basis points (bps), and the 30-year Treasury yield dropped by more than 15 bps in the following days.