Market Update: Tuesday, August 7, 2018

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Daily Insights

  • LPL Research on CNBC. Be sure to catch Senior Market Strategist Ryan Detrick’s appearance on CNBC Squawk Box from this morning, talking earnings, market breadth, and more. View the interview here.

  • Inching closer to new highs. The S&P 500 Index posted its third highest close ever yesterday, only 0.78% away from a new all-time high. It is worth noting that the S&P 500 has now gone 132 trading days (over six months), without a new high. Since the bull market started in March 2009, this is now the second longest stretch without a new high (the longest was May 2015 until July 2016). We continue to expect eventual new highs thanks to very strong corporate earnings, improving confidence, and benefits from fiscal policy.

  • The Fed’s policy conundrum. One of the biggest debates among fixed-income investors these days is the Federal Reserve’s (Fed) future path of monetary policy. While the Fed opted to leave interest rates unchanged for now, its case for future rate increases has been muddled by crosswinds from trade rifts, inflation, currencies and the yield curve. In this week’s Bond Market Perspectives, due out later today, we examine the factors investors must consider when watching fixed-income markets through the lens of future monetary policy.

  • 10-year hits the 3% wall. The 10-year Treasury yield has run up against the psychological 3% level yet again. After closing barely above 3% last Wednesday for the first time since May 22, the 10-year yield has steadily inched back down, currently trading near 2.95%. The upcoming days will be important for the benchmark yield’s future path as investors scrutinize data and news for clues on the health of the economy and the Fed’s next moves, including Consumer Price Index and Producer Price Index July data that should help investors gauge the sustainability of the recent pickup in inflation. Overall, we expect the 10-year yield to grind gradually higher, ending the year between 2.75% and 3.25%, amid periodic bouts of volatility.

  • One of the most popular questions at Focus. Among the most frequently asked questions from Focus 2018 was, “Will we have a full-blown trade war?” It is no surprise that this question was popular among advisors, as trade headlines have dominated the news lately. We give our thoughts on this question in today’s blog (and answer more FAQs from Focus in our Weekly Market Commentary).

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Click Here for our detailed Weekly Economic Calendar

Tuesday

  • Germany: Industrial Production (Jun)
  • Japan: Current Account Balance (Jun)
  • China: Imports (Jul)
  • China: Exports (Jul)

Wednesday

  • Japan: Core Machine Orders (Jun)
  • China: PPI (Jul)

Thursday

  • PPI Final Demand MoM (Jul)
  • Wholesale Inventories MoM (Jun)
  • Japan: PPI (Jul)
  • Japan: GDP (Q2)
  • China: Money Supply (Jul)

Friday

  • CPI MoM (Jul)
  • CPI YoY (Jul)
  • CPI Ex Food & Energy MoM
  • CPI Ex Food & Energy YoY
  • France: Industrial Production (Jun)
  • UK: Industrial Production (Jun)
  • UK: GDP (Jun)

 

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

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All performance referenced is historical and is no guarantee of future results.

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Index data obtained via FactSet

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