Market Update: Thursday, September 27, 2018

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Daily Insights

  • LPL Market Signals Podcast. Listen to the latest Market Signals podcast, in which Chief Investment Strategist John Lynch and Senior Market Strategist Ryan Detrick discuss the potential effects of midterm elections, recent rate hikes, and other events on investors and the economy. Market Signals by LPL Financial is now available on iTunes, Google Play and Spotify. Please join our discussion on social via #LPLMarketSignals.

  • Fed takeaways. The Federal Reserve (Fed) wrapped up its most recent monetary policy meeting yesterday by announcing a rate increase – an outcome the markets largely expected. In our view, the Fed’s updated rate projections and the removal of “accommodative” from policy language were the more interesting takeaways. On the LPL Research blog today, we outline what we think these changes in rate estimates and policy language could mean for future monetary policy. We’ll also provide more detailed analysis on the Fed decision in next week’s Weekly Economic Commentary.

  • Trade tensions weigh on manufacturing and investment. New orders for manufactured durable goods rose 4.5% in August, according to preliminary data. Growth last month matched the strongest pace in a year, and handily beat consensus estimates for 2.0% growth as transportation orders rebounded. However, orders excluding transportation reflect a slowdown in manufacturing as escalating trade anxieties increasingly weigh on U.S. firms. Excluding transportation, durable goods rose 0.1% in the month, below estimates for 0.4% growth. Capital expenditures, measured by new nondefense capital goods orders (excluding aircraft and parts), declined for the first time since March. Shipments of these capital goods, which contribute directly to gross domestic product, grew 0.1%, below forecasts for 0.5% growth. Unfilled orders ticked up to a record $1.18 billion amid growing tariff-induced supply chain disruptions.

  • WTO cuts trade growth forecasts. The World Trade Organization (WTO) cut its forecast for global trade growth this year to 3.9% and projected further deceleration to 3.7% in 2019, citing a decline in investment spending and modest direct economic effects from trade tensions. The WTO also mentioned the divergence in global monetary policy as a headwind for trade activity as currency volatility fuels capital outflows and financial contagion in emerging economies.

  • Eurozone economic confidence slides. The European Commission’s measure of economic confidence for countries in the Eurozone fell for a ninth straight month, its longest slide since 2011. Economic sentiment has steadily declined every month this year as the Euro area processes economic and political turmoil, as well as the negative impacts from global trade tensions.

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