Market Update: Tue, Dec 18, 2018 | LPL Financial Research

LPLResearch-Macro-View

Daily Insights

Investors piling into bonds, high-yield issuers staying away. According to Bank of America Merrill Lynch’s December survey, pessimism among investors is at its highest level in a decade, with November seeing the largest one-month rotation into bonds since the firm started its survey in 2001, though participants remained underweight fixed income in aggregate. At the same time, the Financial Times is reporting that no company has borrowed funds in the $1.2T U.S. high-yield corporate bond market this month. Should the trend continue, it would mark the first month since November 2008 that not a single high-yield bond priced in the market. The moves broadly reflect concerns that a marked slowdown in global growth could be on the horizon; however, while we expect GDP to moderate in developed economies, we see global growth holding near 3.7% in 2019, led by the U.S. and emerging markets economies.*

Housing industry showing signs of life. Data out this morning showed housing starts unexpectedly increased 3.2% in November (est. -0.9%), building permits jumped 5%, and housing completions increased modestly. The positive figures following yesterday’s NAHB Housing Market Index, which came in at its lowest level since May 2015. Tomorrow’s existing home sales report will likely garner outsized attention as investors continue to gauge the status of the overall housing market, which has struggled to keep pace with growth in the overall economy.

Fed meeting preview. The Federal Reserve (Fed) kicked off its final meeting of 2018 today. Financial markets, however, are pricing in expectations for next year as investors’ anxiety about the Fed’s exit from accommodative monetary conditions increases. On the LPL Research blog, due out later today, we highlight investors’ focus on tomorrow’s Fed rate announcement, and unveil our forecasts for monetary policy in 2019.

LPLResearch-Monitoring-the-Week-Ahead

Click Here for our detailed Weekly Economic Calendar

Tuesday

  • Building Permits (Nov, prelim)
  • Housing starts (Nov)
  • Germany IFO Business Climate (Dec)
  • Japan Trade Balance (Nov)

Wednesday

  • FOMC Meeting
  • Existing Home Sales (Nov)
  • UK PPI (Nov)
  • UK CPI (Nov)
  • Germany PPI (Nov)
  • Japan Central Bank Meeting

Thursday

Friday

 

IMPORTANT DISCLOSURES

*Please see the Outlook 2019: FUNDAMENTAL: How to Focus on What Really Matters in the Markets for additional description and disclosure.

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.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

All company names noted herein are for educational purposes only and not an indication of trading intent or a solitication of their products or services. LPL Financial doesn’t provide research on individual equities.

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

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

The investment products sold through LPL Financial are not insured deposits and are not FDIC/NCUA insured.  These products are not Bank/Credit Union obligations and are not endorsed, recommended or guaranteed by any Bank/Credit Union or any government agency.  The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible.

Index data obtained via FactSet

Member FINRA/SIPC

For Public Use – Tracking #1-803761 (Exp. 12/19)