Market Update

Yields Rising Market Diving All eyes are on interest rates as the 10-year Treasury yield continues to grow.  Rates are rising on increasing optimism the pandemic is coming to an end and the economy will return to “normal.”  If true, and the economy begins to gain speed, then the Fed may be forced to raise short-term interest rates to combat inflation. Fed chair Powell told Congress this week that he has no intention of reducing its broad support for the economy or raising rates because the fears of inflation are overblown.  This difference of opinion between markets and Chairman [...]

Economic Traction with Fed and Stimulus Action The Federal Reserve Chair Jerome Powell made it clear he will continue to support the bond market, saying "now is not the time" for a discussion to end that help. The Fed further stated that they had learned lessons from the 2013 taper tantrum and would telegraph any changes in their approach with ample guidance (1). This is good news for bond investors as it may help keep bond values stable during periods of equity market volatility. The holiday shopping season did not go as well as hoped for retailers with sales [...]

Market Rises with No Surprises Global stock markets reached new all-time highs during the month of December, as investor optimism continues to show strength around the world (1). While the stock market is a forward-looking mechanism, the current environment still has plenty of room for recovery. COVID 19 cases continue to peak and set new daily records for cases and deaths, sparking rolling shutdowns of various regions across both emerging and developed countries. Those figures have been met with the good news of the first COVID19 vaccines being manufactured in large capacities, distributed to various destinations, and for the [...]

A Balance of Power and Vaccine Positively Received What’s happening now:  Four major events arrived during November, and their effects were both immediately witnessed and continue to be seen in the markets across the globe. Those four major events are the U.S. elections, promising news of vaccines, another COVID-19 wave accompanied by ensuing shutdowns, and continued economic data reports showing a damaged U.S. economy on a pathway to repair. Let's take a snapshot of each of these events and briefly review what happened, how the markets have reacted so far, and what the potential impacts may be. What we [...]

Economic Signs of Life What’s happening now:  October continues to show signs of an economy that continues to improve from its abrupt stop. While the recovery is a welcome addition to this year's historic course, taking a closer look at the health of the economy reveals that although many segments have recovered, others have not fared as well. Further, the future's unknowns, such as the elections and delayed fiscal relief packages, create a significant amount of uncertainty that may not be settled for weeks or even months (or more). Let us unpack the good and bad news of the [...]

Low Rates, Market Head Fakes What’s happening now:  As noted last week, September has shown an increased level of equity market volatility as technology stocks pulled back.   In the Nasdaq Composite Index, an official correction (-10% off the high) was reached in just four trading days – the fastest ever on record(1).  Most experts agree equity markets have largely risen based on speculation and the expectation of further government stimulus.  We believe that markets have a substantial chance to continue declining in the short-term as economic data has shown to be stubbornly weak from pre-COVID pandemic levels. In a [...]

Reaching New Highs on Stimulus Expectations What’s happening now:  The S&P 500 hit a new all-time high as investors continue to have faith that Congress and the Fed will pump additional stimulus into the economy (1).  Despite initial reports Republicans and Democrats would come together on a second round of stimulus in early August, talks quickly broke down.  In response, President Trump issued several executive orders to unilaterally extend stimulus – however, the effectiveness and legality of the executive orders are in serious question.  It is not expected for meaningful negotiations to begin again until late August or early [...]

Federal Reserve Pumping Keeps the Market from Dumping? What’s happening now:  Equity markets continue to push higher as investors expect Congress and the Fed to continue pumping stimulus into the economy.  It is our expectation that the new stimulus package will come in early August and will be less robust as the first package.  The House passed a $3.5 trillion package mid-May to “draw a line in the sand” for the Senate to react to (1).  Senator McConnell is signaling the Senate will consider a roughly $1 trillion package (2).  Given the election, we expect negotiations to be fierce [...]