HIGHLIGHTS
- Another week, another record, in both the US and around the world.
- The ten-year treasury continues its march higher.
- Senators are racing to complete a deal to avoid a government shutdown.
- The economy continues to look strong.
MARKET RECAP
Another week, another record. Both the overall US stock market and the S&P 500 closed at all-time highs, up by 0.82% and 0.90%, respectively. International stocks also closed at a record, +0.93%.
Interest rates were up across the board, that dropped bonds by 0.51%. The 10-year treasury bond has been ramping higher along with stocks, closing the week with a yield of 2.64%, the highest level since July of 2014. The 10-year 2-year yield curve has steepened by 7 basis points so far this month. Part of the jump in yields was due to faster economic growth in China. Chinese growth of 6.9% was the fastest in two years. The 10-Year Chinese bond yield went above 4% for the first time in four years. Faster growth in China should be positive for commodities.
While equities have been rallying, the US dollar has been falling, it is off 1.71% year to date. That is a big drop. While investors here in the US are thrilled with the performance of the US stock market, investors in Europe aren’t. A European investor would be down about 3% over the last two weeks if they owned US stocks in euros, due to the lower dollar.
SHUTDOWN
A group of moderate Senators were racing Sunday evening to avoid a shutdown of the government on Monday. We didn’t know there were any moderate politicians left, but we hope they succeed. The fact that there was no agreement going into the weekend did not disturb the markets at all. That pretty much sums up the “market think” these days, simply oblivious to the mayhem in Washington and around the world and only concentrating on strong corporate profits and momentum in equities.
ECONOMY
The economy continues to look strong. The GDPNow model has Q4 2017 growth estimated at 3.40%. And the NowCast model has Q1 2018 growth estimated at 3.07%.
SCOREBOARD
