As trade war fears rose and economic data disappointed, Treasury yields declined in May. The 10-year Treasury rate decreased to 2.14% at the end of May, down 37 basis points from the previous month. The stock market fared no better, either, as the S&P 500 lost 6.6% in May. These decreases, paired with the Trump administration’s recent move to impose punitive tariffs on Mexico, have investors anticipating a potential near-term economic downturn with a second front in the global trade fight. However, in early June, Fed Chairman Powell suggested trade tensions could lead the central bank…

On May 1, the Federal Reserve voted to hold interest rates steady, between 2.25% and 2.50%, meeting market expectations. The decision follows a much stronger-than-anticipated growth over the first three months of the year. Bureau of Economic Analysis data showed U.S. real gross domestic product (GDP) increased 3.2% in the first quarter of 2019, beating analyst expectations. While consumer spending surged to its highest level in over nine years in March, rising 0.9% overall (0.7% when adjusted for inflation), driven mainly by a jump in health care and motor vehicle expenditures. The 10-year…

While some analysts point to the dramatic reduction in interest rates over the past six months as an indicator of a possible recession, the economy and broader market are showing mixed signals. Retail sales unexpectedly fell in February while the Institute for Supply Management’s (ISM) Manufacturing Index rose in March. The S&P index was up over 13% in Q1 2019 and although economic growth continues to slow, the next several months will provide greater clarity in the direction of the U.S. economy.

The U.S. economy grew a solid 2.6% in the fourth quarter of 2018, and increased 2.9% for the year. Economic growth has trended down over the last several quarters and many economists are projecting slower growth heading into 2019. The Federal Reserve appears content with holding off on any interest rate action in the near future but will observe how the U.S. and global economies perform through the summer. The 10-year Treasury remained largely stable throughout February as the benchmark rate rose just a few basis points for the month.

January’s economic data gave investors a warm welcome (polar vortex aside) as we kicked off 2019. A much better than anticipated jobs report showed that the economy is still generating a substantial number of jobs while inflation has stayed largely in check. The Federal Reserve did not raise rates this month and provided guidance indicating it has softened its position on future rates hikes in the near future, which helped to keep the 10-Year Treasury flat for the month, ending at 2.63%. All of this was encouraging to the equity markets, as the S&P 500 index was up nearly eight percent…

In a tumultuous last month of the year, policymakers and the U.S. economy showed conflicting signs of what to anticipate going forward into 2019. In December, the Federal Reserve raised its benchmark interest rate 25 bps and provided guidance for potentially fewer rate hikes in the new year. Stock market volatility was at a peak and December ended as one of the worst months of performance in history, with all indices down at least 8.7%. As a result of this news and mounting fears of an economic slowdown, the 10-Year Treasury yield saw a precipitous drop in excess of 30 bps, from 3.01% at…

The 10-year Treasury rate dropped 16 bps in the month of November, kicking off December below 3.00%. While there is still confidence in the strength of the U.S. economy, some investors have concerns of a weakening economy on the horizon. Most economists still anticipate the Fed will increase short-term rates before the end of 2018, but there is uncertainty about the number of increases in 2019 as the Fed assesses economic conditions heading into the New Year.

While the stock market experienced significant weakness and volatility in October (with the worst month for the S&P 500 and Nasdaq in over seven years), other economic indicators remain strong. Wages have grown 2.9% in the past 12 months, with a tightening labor market finally pushing up wages, and unemployment has stayed steady at 3.7%. Interest rates fluctuated throughout October, but the 10-year Treasury rate finished at 3.12%, an increase of just 3 bps for the month. Additional Q3 earnings reports, mid-term election results, as well as further clarity on the economic impact of…

While the Federal Reserve hiked its benchmark interest rate a quarter point last week as expected (to a range of 2.00% to 2.25%), some of its additional commentary was noteworthy. Projecting one more rate hike before the end of the year and three more in 2019, the Fed revised its 2018 GDP estimate up, from a 2.8% increase to 3.1%. Despite the optimistic view by the Fed, committee members are projecting declining growth in GDP over the next few years, with a 1.8% growth rate anticipated by 2021.