The Christmas Eve rally continued through January 2019 and for the month global equities recorded significant positive returns. Treasury interest rates saw hardly any movement, but the risk markets of fixed income joined the rally creating positive total returns overall for bonds.
A growing US economy, rising employment, wage gains, low inflation and buoyant consumers are among the bright spots to highlight as we start 2019. Mid-single-digit returns across the equity markets and low-single-digit returns for bonds are achievable this year. But risks are rising, too. Read on for a review of 2018, a discussion of how we see 2019 unfolding, and thoughts on how to position your portfolio.
For risky assets, December was the most difficult month in a year that proved to be particularly tough sledding for stocks. During times of market turbulence, it's particularly important to look through the volatility, use a diversified approach, and stay invested in order to achieve your long-term financial goals.
With a strong upward move in the final week of the month, November delivered a positive rate of return for financial markets. Helped by favorable trade tariff news and doubt the Federal Reserve would increase the target Federal Funds rate multiple times in 2019, the darkness experienced in the last three months was lifted. However, a slowing global growth outlook with moderating US corporate earnings may bring continued price volatility in risk markets as the markets reset.
October was a frightening month for risky assets. Comments from the Federal Reserve suggesting higher U.S. interest rates, continued trade tensions between the U.S. and China, and expense and profit margin pressures for big companies conspired to push bond yields up and stock prices down.
U.S. stock indexes again hit record highs in September but sentiment and economic events led to a mixed set of results for the global markets. The markets have a lot to digest and mixed results seem appropriate considering the multi-level economic crosswinds.
August was a hot month for US equities. The buoyant US economy, confident consumers, and balanced testimony from the Federal Reserve, along with some progress regarding trade, helped lift US stocks to new all-time highs. Outside of the US, the markets faced headwinds.
July ended a news-rich month with favorable returns for global equities and the higher risk sectors of the fixed income market. Support came from strong second-quarter earnings reports and a jump in GDP to its best level in four years. Tariffs remained a focus but the tone was light and improved with a new agreement with Europe and no escalation with China. Late in the month, the news cycle flipped to earning misses from highly owned Facebook, Twitter, and Netflix.