June – July 2019

U.S. Economic and Market Highlights

The Economy:

  • The trade war between the U.S. and China took a turn for the worse in May. President Trump accused China of backpedaling on already agreed-upon commitments made in the negotiations, and increased tariffs on Chinese goods. China promptly responded with higher tariffs and negotiations appear to be at an impasse.
  • The International Monetary Fund (IMF) projected a rebound in global growth in the second half of 2019. But an important assumption in those forecasts was an improving outlook for trade tension between the U.S. and China. With that assumption no longer appearing valid for now, some economists have recently lowered their economic growth forecasts.
  • It is estimated the current and threatened U.S. and China tariffs could reduce global growth by 0.4% in 2019 and 0.5% in 2020 in the form of higher prices for imported goods acting as a headwind for consumer spending and potential supply chain disruptions.
  • Central banks around the world have signaled a response by easing monetary policy (lowing short-term interest rates), or posturing to do so, in order to create economic stimulus to offset some of the economic drag. The Federal Reserve lowered interest rates by 0.25% on July 31st.

Fixed Income:

  • An easier monetary policy stance from the Fed and a weaker U.S. dollar could provide a catalyst for emerging market bonds to outperform. This was the case in June as indicated in the table below.
  • Bond markets recalibrated as yields on the benchmark U.S. 10-year Treasury bond have dropped since late in 2018 at 3.14% to under 2.0% in early August 2019. Bond indices’ total returns have been strong due to the declining rate environment which generally increases underlying values of bonds currently held with higher rates.


  • The stock market continues to rally, and break record highs, as June’s earnings reports were better than expected and consumer spending remains strong, despite slowing global growth and business investment. Year-to-date returns as of the end of July were 20.7% and 11.6% for the S&P 500 U.S. Stock Index and MSCI EAFE (global stock) Index, respectively.

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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