Moments ago, House Speaker Nancy Pelosi (D-Calif.), flanked by the chairs of the committees of jurisdiction over the House’s impeachment inquiry over the last several months (Oversight, Intelligence, Ways and Means, Financial Services, and Judiciary) announced her intention to have the House consider two articles of impeachment against President Trump. I thought I’d provide a quick primer on what’s happened this morning and what we can expect in the days and weeks ahead.
In many ways, the macro outlook is brighter today than it was one year ago as economic growth is solidifying, trade and monetary policy risks have receded and sentiment has improved. Yet, we think market returns may be lower over the coming year and decade compared to what we experienced in the past. It will continue to be a challenge to construct outcome-focused investment portfolios.
U.S. Treasury yields moved higher last week, led by longer maturities. Markets focused on potential tariff increases on December 15th, but found comfort in better-than-expected U.S. economic data. All eyes will be on the Federal Reserve (Fed) later this week, although expectations are for no change in the fed funds rate.
Economic data was uneven last week, and investors continued to focus on the on-again, off-again prospects for a U.S./China trade deal. Global stock markets were mixed, and the S&P 500 Index climbed very modestly, ending just below its all-time high.
Please join us as we discuss:
- Enhancing return by focusing on income
- Effects of tax law changes alter taxable municipal supply
- December Fed meeting and factors to consider for 2020
U.S. Treasury yields finished last week within 2 basis points of their opening levels. With little movement in U.S./China trade negotiations, the market turned to better-than-expected U.S. economic data. The market shows just a four percent chance of a Federal Reserve (Fed) rate hike later this month.
Since the summer, investors have grown significantly less pessimistic about the global economy and financial markets. Stock prices have been rising as investors have been moving money into equities.
Former New York City Mayor Michael Bloomberg officially entered the Democratic presidential primary last week, and it didn’t take long for his opponents to react. Sen. Elizabeth Warren (D-Mass.) criticized the fact that Bloomberg, who is worth an estimated $54 billion, plans to self-finance his campaign.
Investors often favor par bonds over premium bonds, believing that a lower dollar price will translate into higher returns. While par bonds may have a lower dollar price, premium bonds may offer a higher actual rate of return in various market scenarios. The two types of bonds are priced and perform differently, as we discuss in this paper.
Investors have been focusing on a range of positives recently, including decent economic data, stronger-than-expected corporate earnings results and a sense that the global economy is stabilizing. Nevertheless, stock prices faltered last week on news that the U.S./China phase-one trade deal was looking less likely and the sense that markets have already priced in much of the good news.
Longer maturities led most Treasury yields lower last week. With short maturity yields actually finishing slightly higher, the yield curve flattened.
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