April – May 2019

U.S. Economic and Market Highlights

The Economy:

  • First quarter GDP was revised downward to 3.1% from the 3.2% as previously reported, bringing the current expansion period to ten years, one of the longest in modern history.
  • Cumulative growth is still modest and global growth projections from the IMF’s World Economic Outlook have been revised downward since the October 2018 report.
  • Monetary policies at Central Banks remain accommodative, especially in the Eurozone where economic uncertainty lingers and was heightened by recent elections.
  • In the U.S., the 10-year Treasury Bond rate declined almost 40 basis points in May highlighting concerns about the potential for an economic slow-down, as the slope of the yield curve/difference between longer and shorter-term interest rates inverted.
  • According to economic theory, the slope of the yield curve is a reasonably accurate predictor of changes in the business cycle. Yield curve inversions have historically preceded recession periods.
  • On the other hand, the current level of foreclosures and bankruptcies are very low compared to the pre-2008 financial crisis. This alludes to the difficulty of using the yield curve to a significant degree for economic predictions.
  • Since the beginning of 2019, the Federal Reserve took a pause toward raising interest rates, which helped the markets as investors had one less thing to worry about. 


  • Equity markets rallied through April 30th as corporate earnings improved from reduced expenses and stable sales growth.
  • But in May, U.S.-China trade negotiations reached a new impasse and, as a result, investors’ concerns about higher costs from the trade war being passed on to consumers led to declines in global stock prices.
  • The S&P 500 stock index ended the month of May down -6.6% reducing the year-to-date return to 9.78% as of May 31st.

 Fixed Income:

  • Concerns about the intensified trade tensions and soft global economic data contributed to declines in riskier assets and higher demand for safe-haven assets such as U.S. government bonds.
  • Higher demand for fixed income investments led to a bond market rally, especially for interest rate sensitive securities, while corporate bonds and bank loans retained above average valuation levels.


  • Commodity prices advanced in the first four months of 2019, driven by higher U.S. crude oil prices, in part due to supply disruptions in Iran, Venezuela, and Libya.
  • Institutional investors increased allocations to private equity funds over the last five years, and the time frames for investors to make capital commitments has shortened, as more than half of investor commitments are now being made in the first six months of the fund-raising period due to higher demand.

The above was prepared for informational purposes only and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security/instrument or to participate in any trading strategy. Past performance is not indicative of future results.

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