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Market Bullets - Weekly Update

For the market week ended Friday, August 30, 2019

  • US Equity Markets bounced back last week after four weeks of declines, as China indicated that it would like to find a way to de-escalate the trade tensions with the US, providing some hope to investors that increasing trade tensions may start to ease. As a result, the S&P 500 rallied 2.8% last week to bring its gains for the year up to 16.7%. The Nasdaq rose 2.7% for the week and is now up 20.0% for the year, while the Russell 2000 (small-cap stocks) increased 2.4% for the week and is now up 10.9% for the year.
  • Global equity markets benefited from the easing US-China trade tensions, though ongoing uncertainty around Brexit and new concerns about Italy's government impacted European shares. As a result, Developed Markets only increased 0.8% for the week to bring its gains for the year up to 8.0%. Emerging Markets rose 0.9% for the week and are now up 1.9% for the year.
  • US interest rates are trying to stabilize, though they finished lower again last week. The yield on the US 10-Year Treasury fell to 1.50% from 1.54% the prior week, with the yield curve finishing the week slightly inverted, as the yield on the US 2-Year Treasury closed at 1.51%. By way of comparison, both the German and Japanese bonds have negative yields, with the German 10-Year yield at -0.71% and the Japanese 10-Year yield at -0.28%.

Of Interest to Us...

  • The US Consumer appears to be the engine driving the global economy. Despite the negative headlines, US Consumer Confidence for August came out last week at 135.1, which was well above consensus and near 20-year highs. In addition, Personal Spending for August grew 0.6%, also above expectations. With the consumer driving roughly 70% of US economic activity, the strength of the US consumer provides some reassurance about the overall health of the US economy.

 

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