When you turn on the evening news, every broadcast seems to bring more stories of tragedy, fighting, and petty politics. But if we take the time to a look a little closer, we often find that amidst the doom and gloom, people all around the world are constantly demonstrating courage, charity, and sacrifice. So, I’d like to share an inspirational story I’ve come across that shows how even a little bit of kindness can make a big difference...
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.
If you ask an economist what makes them toss and turn at night, chances are they’ll tell you, “Fear of missing the warning signs of a recession.” After all, for anyone who studies the economy for a living, few things could be worse than a sudden economic slump catching you by surprise. That’s why many economists rely on certain indicators to predict if there’s rough weather ahead. Historically, one of the most reliable indicators is the inverted yield curve. This is when the yield on long-term bonds drops below the yield on short-term bonds. Why does this matter to economists? Because an inverted yield curve has preceded every recession since 1956...
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...
