The U.S. economy continues to perform well when compared to the rest of the developed world, and is still exhibiting growth near its long-term trend. The outlook in other developed economies is not quite as bright, however, as unconventional and aggressive policy decisions from global central banks are becoming increasingly ineffective...
After a decade of easy money, the 2017 Tax Cuts and Jobs Act provided incentives for investment, and in 2018, the regulatory environment had eased and additional government spending programs further boosted demand. In fact, in our 2018 Outlook: The Return of the Business Cycle, we highlighted the return of fiscal leadership as a primary driver for economic and market activity. The improved growth environment led to a tighter monetary stance from the Federal Reserve (Fed) in 2018, even as the contentious trade environment diminished business investment.
There’s a growing pile of negative-yielding debt around the world amid extraordinary monetary policy initiatives. While maintaining respect for global money flows, we believe the combination of economic fundamentals, domestic monetary policy, and a widening federal budget deficit limit the prospects for subzero yields in the United States...
We recently reduced our year-end forecast range for the 10-year U.S. Treasury yield from 2.5–2.75% to 1.75–2%. This significant reduction reflects what we consider the many somewhat curious aspects of the domestic and global macroeconomic environments. Trade uncertainty, low inflation, geopolitical risks, monetary policy, and relative valuation all played a role in our decision. To be sure, delayed prospects for a U.S.-China trade agreement remain central to our economic and market projections in the coming months.
Welcome to the updated LPL Research Weekly Market Commentary! This redesign incorporates the cleaner, more streamlined look you requested along with our informed insights on what’s happening in the markets now. As a bonus, each week you’ll also be able to link directly to our new Weekly Market Performance, which reviews top equity and fixed income indexes. We hope you like the new format and that you’ll continue to let us know what you want—and don’t want—from your LPL Research team. Thank you for your business. — John Lynch...
August has been one of the worst months for the stock market historically. In fact, it has been the worst month on average for the past 10 years, with the S&P 500 Index down an average of 0.78% for that month [Figure 1]. Last week’s 3.1% slide for the index certainly fit that pattern, which begs the question whether investors should buckle up for more seasonal losses this month. Despite last week’s losses, 2019 has been a good year for stocks—the S&P 500 is up 17% year to date through August 2 and, excluding any losses Monday, still stands just 3% from its all-time closing high on July 26. Here we summarize August’s lackluster track record and discuss whether this August will fit the pattern.
