November – December 2019

U.S. Economic and Market Highlights

The Economy

  • The U.S. GDP measurement of economic growth was revised upward to 2.1% in the third quarter from the initial estimate of 1.9% issued last month.
  • The signing of “phase one” of a trade deal between the U.S. and China, expected in January, is estimated to result in an increase in Chinese purchases of U.S. agricultural goods, manufactured goods, energy and services which could add roughly a half percentage point to U.S. economic growth during the next two years.
  • As the addition of nonfarm jobs exceeded expectations and the unemployment rate in the U.S. dropped back to 3.5% in November, average hourly wages rose 3.1%, and inflation remained tame at 2.1% from a year ago.
  • The expansion in the U.S. is the longest economic expansion in U.S. history. Eurozone and UK economic sentiment bounced back in November. But manufacturing continues to trend below average in the U.S., Germany, Japan, and U.K. leading the International Monetary Fund (IMF) to adjust downward its overall GDP outlook for 2020.

Fixed Income

  • Monetary policy rates remained unchanged last month in the U.S. and E.U. and are expected to remain steady for the time being as central bankers continue to monitor conditions as they develop in 2020.
  • U.S., German, and Japanese government bonds experienced an increase in yields across the maturity range in November, reverting back to a more normal, upward sloping yield curve, primarily due to easing trade tensions and global central bank stimulus.
  • Emerging markets’ (EM) sovereign debt fundamentals remain relatively strong as leverage levels in EM countries’ are far lower than in developed countries and projected growth rates are higher.
  • There may be limited upside potential for corporate bond values as they appear expensive given the lower yields being paid and the narrow/tight spreads relative to treasury bonds.


  • All three major U.S. equity indices reached new record highs as the year-end rally continued through December. The technology sector lead markets higher, with their best year since 2009.
  • Growth companies outperformed value companies in 2019. But value stocks outperformed growth over the three months ending in November. This is both a reversion toward the mean and a reversal of positive growth momentum (as global markets begin to experience slower growth).
  • The energy sector was the worst sector for the year. Oil prices jumped more than 3% after a U.S. airstrike in Iraq killed one of Iran’s top military commanders. The gains in energy stocks quickly faded as a risk-off sentiment took hold of the equity market from increased military tension in the middle-east and its potential repercussions.


  • Private equity (PE) valuations are trending higher but continue to provide a relatively attractive investment opportunity for institutional investors. The average PE middle market U.S. buyout transaction multiple reflects a 27% discount relative to public market valuations.

[See the Market Tracker below for additional statistics and Global Market Indices.]

This communication 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.