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Market Bullets - Weekly Update

For the market week ended Friday, October 11, 2019

  • Trade-related headlines remained the focus of US Equity Markets in a volatile week, as the US and China trade teams met and ultimately reached a "preliminary" deal that pushed back additional US tariffs in exchange for additional Chinese agriculture purchases. As a result, after negative headlines weighed on markets early in the week, the S&P 500 rallied late to manage a 0.6% gain for the week, bringing returns for the year up to 18.5%. The Nasdaq rose 0.9% for the week and is now up 21.4% for the year, while the Russell 2000 (small-cap stocks) increased 0.8% for the week and is now up 12.1% for the year.
  • Global equity markets rallied sharply on the US-China trade news and optimism around a potential Brexit deal. As a result, Developed Markets increased 2.1% for the week to bring its gains for the year up to 10.9%. Emerging Markets rose 1.5% for the week and are now up 4.8% for the year.
  • US interest rates rose notably last week amid optimism from the trade talks and healthy US economic data including relatively tame inflation. The yield on the US 10-Year Treasury increased to 1.73% from 1.53% the prior week. There is no yield curve inversion at the moment, with the US 2-Year Treasury sitting at 1.59%, resulting in a positive curve by 0.14%.

Of Interest to Us...

  • Measures of US Consumer Sentiment for October came in markedly higher than expectations, with the preliminary Michigan Consumer Sentiment of 96.0 vs. 93.2 in September and expectations of 89.9. Further, consumers' real income expectations rose to their highest level in two decades. Given that the US Consumer has been holding up the US economy, the strength in Consumer Sentiment likely bodes well for continued consumer spending and, by extension, the US economy.
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