This Weekly Market Update reviews the top three market headlines: Inflation Measurements Inch Higher, U.S. Consumer Confidence on the Rise, U.S. Government Debt Yields Fall on Economic Worries.
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Top Three Market Headlines

Central Banks Hint at Easing: Amid rising trade tensions and signs of softening global economic growth, global central banks are signaling a greater willingness to enact more accommodative monetary policies in the near future. European Central Bank President Mario Draghi said last week that the bank could roll out fresh stimulus measures, such as extending the period before increasing interest rates or restarting bond purchases. Meanwhile, U.S. Federal Reserve officials last week said uncertainties about economic growth have increased, and Fed President Jerome Powell said the bank was prepared to respond via policy measures to any weakness. 

Treasury Yields Hits Multi-Year Lows: Yields on U.S. Treasury bonds continued their freefall last week, with the benchmark 10-Year U.S. Treasury bond yield hitting a two-and-a-half-year low upon dipping below 2.0% during the day on Thursday. The 10-year note’s yield has fallen more than a full percentage point since November of last year, reflecting slowing economic growth, lackluster consumer pricing prints and the Federal Reserve’s tilt to a more patient monetary policy. The 2-year Treasury note—which tends to be particularly sensitive to Fed policy—also declined sharply after the Fed’s meeting last Wednesday, hitting 1.70% on Thursday, its lowest level since November, 2017.

Gold Rush: Gold surged to multi-year highs last week in the aftermath of the Federal Reserve’s comments about its willingness to cut interest rates. For the week, the price of gold, as reflected in the nearest-month futures contract, rose more than 4%, piercing the $1,400 per ounce mark for the first time since 2013 and bringing its gains since August of last year to nearly 20%. Factors seemingly keying the yellow metal’s latest surge include collapsing global interest rates (which lessens gold’s relative disadvantage as a non-yielding asset) along with geopolitical troubles that typically fuel investor demand for safe haven assets. In addition, the Federal Reserve comments about cutting rates immediately weighed on the value of the U.S. dollar, with which gold tends to move inversely.

Data Points
  • The Federal Reserve held its federal-funds rate target unchanged last week at a range of 2.25% to 2.50%.
  • The 10-year U.S. Treasury note yield fell below 2.0% for the first time since 2016.
  • The price of gold surpassed $1,400 per ounce for the first time since 2013.

 

As of June 21, 2019

Week

Quarter-To-Date

Year-To-Date

One-Year

MSCI All Country World

2.42%

3.52%

16.12%

4.85%

S&P 500

2.22%

4.59%

18.87%

9.48%

Russell 2000

1.80%

0.92%

15.64%

-6.96%

MSCI EAFE

2.22%

3.01%

13.28%

0.21%

MSCI Emerging Markets

3.83%

0.22%

10.16%

0.06%

FTSE NAREIT

0.39%

3.44%

20.33%

15.32%

Bloomberg Commodity

1.34%

-2.24%

3.94%

-6.65%

Barclays Aggregate

0.44%

2.64%

5.66%

7.75%

 

 

WSJ 6/18/2019. 6/19/2019, 6/20/2019; Data from Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.