Market Update: Tues, Jan 15, 2019 | LPL Financial Research


Daily Insights

Treasury yield curve steepens, spread to investment grade widens. The Treasury yield curve steepened over the past week despite recent data suggesting global economic activity, particularly in China, ticked lower. Instead, more dovish comments from Federal Reserve Chair Jerome Powell and other central bank officials amid the backdrop of a robust labor market, healthy wage growth, and moderate price inflation have helped to not only push longer-term rates higher, but also increase the spread between Treasuries and comparable maturity investment grade (IG) corporate debt. At current levels, we think IG valuations look attractive. Should Treasury yields continue to rise gradually while IG yields stay flat or contract, which we expect, IG returns should hold up relatively well.

TED spread’s economic signal. Credit stress among banks has remained relatively calm recently, signaling an economic recession may not be as imminent as some investors fear. On the LPL Research blog today, we’ll highlight recent movement in the TED spread, or the spread between the 3-month London interbank offered rate (LIBOR) and the 3-month Treasury yield, a measure that gained notoriety for its foreshadowing of the financial crisis.

Putting the good start in perspective. Today is the 10th trading day of 2019, with the S&P 500 Index up 3.0% for the year after 9 trading days. 2018 saw the S&P 500 up 4.2% on day 9 but it finished the year down 6.2%, so a good start to a year is by no means a perfect indicator for continued market strength. At the same time, historically we’ve seen good starts to a year produce solid returns. In fact, starting in 1950, when the S&P 500 was up 2.5% or more on the 5th day of the year (like 2019) the full year had been higher the previous 12 times in a row, with 2018 officially ending this streak. There are many other things that matter more for how stocks will perform during a year than how the first few days do, but it is worth noting this seemingly random indicator did have a nice record until last year.

 NEW LPL Market Signals Podcast. In this week’s episode of the Market Signals Podcast, LPL Financial Chief Investment Strategist John Lynch and Senior Market Strategist Ryan Detrick look at another potentially solid quarter of earnings growth despite the government shutdown. Subscribe to the free Market Signals podcast series on iTunes, Google Play, Spotify or wherever you get your podcasts!


Click Here for our detailed Weekly Economic Calendar



  • Retail Sales (MoM, Dec)
  • Import Price Index (MoM, Dec)
  • Export Price Index (MoM, Dec)
  • Federal Reserve Beige Book Release (Jan)
  • Germany CPI Report (Dec)


  • Housing Starts (MoM, Dec)
  • Building Permits (MoM, Dec)
  • Initial Jobless Claims (Jan. 12)
  • Eurozone CPI Report (Dec)
  • Japan CPI Report (Dec)
  • Japan Industrial Production (Nov)


  • Industrial Production (MoM, Dec)
  • University of Michigan Sentiment Index (Preliminary, Dec)



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Index data obtained via FactSet


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