Top Three Market Headlines
Retail Sales Rebound in October: Bouncing back from a modest decline in September, U.S. retail sales in October rose a seasonally adjusted 0.3% from September and 3.1% over the prior year. This was the seventh month out of the last eight in which retail sales have grown, reflecting the resilience of U.S. consumers even as the U.S. manufacturing sector has slowed. Excluding the auto and fuel sectors, which tend to be fairly volatile on a month-to-month basis, retail sales rose 0.1% versus September and 3.7% over the prior year. Internet retailers continued to show the strongest rate of growth, at 14.3% in October versus the prior year, reflecting the continued migration of consumers’ shopping habits.
Yield Curve Steepens: The U.S. Treasury yield curve has recently resumed a more traditional upward-sloping shape, with longer-dated Treasuries once again yielding more than short-dated issues. Two widely-followed measures of the yield curve’s steepness, the 10-year/3-month and 10-year/2-year Treasury bond yield spreads, had turned negative during the summer months, producing a so-called inverted yield curve. Investors closely watch this relationship given that an inverted yield curve has often, though not always, preceded an economic recession. However, both spreads have climbed back into positive territory in recent months, as the Federal Reserve’s latest interest-rate cuts have depressed short-term yields while those on longer-term issues have risen modestly on hopes that the Fed’s rate cuts and progress toward resolving trade tensions will aid economic growth.
Small Businesses Remain Optimistic: Despite recent challenges facing the U.S. economy, small businesses remain fairly optimistic, according to the Small Business Optimism Index produced by the NFIB Research Foundation. The October reading for the index registered 102.4, a slight gain from the prior month. Eight of the 10 components of the index advanced, led by job creation, inventory investment, and capital spending. To no surprise, 34% of small businesses surveyed reported negative effects from trade policy; nonetheless, 29% of businesses plan to increase capital outlays in the next few months, up two points from September, with plans to invest being strongest in sectors like agriculture, wholesale trade, manufacturing, and transportation.
Data Points
- U.S. retail sales rose 0.3% in October versus the prior month
- The 10-year/2-year Treasury bonds yield spread hit 27 basis points last week, the highest level since July
- The NFIB Small Business Optimism Index has remained above 100 since December, 2016
|
As of November 15, 2019 |
Week |
Quarter-To-Date |
Year-To-Date |
One-Year |
|
MSCI All Country World |
0.41% |
4.91% |
21.90% |
14.31% |
|
S&P 500 |
0.94% |
5.10% |
26.69% |
16.63% |
|
Russell 2000 |
-0.10% |
4.96% |
19.84% |
6.30% |
|
MSCI EAFE |
0.08% |
4.83% |
18.25% |
12.72% |
|
MSCI Emerging Markets |
-1.49% |
4.93% |
11.10% |
9.72% |
|
FTSE NAREIT |
1.46% |
-0.68% |
26.10% |
18.90% |
|
Bloomberg Commodity |
-0.99% |
1.90% |
5.09% |
-2.40% |
|
Barclays Aggregate |
0.54% |
-0.19% |
8.31% |
10.79% |
NFIB 11/15/2019, US Census Bureau 11/15/2019, WSJ 11/10/2019, FactSet. 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.