Market Update: Tue, July 9, 2019 | LPL Financial Research

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Daily Insights

Global indexes pause ahead of a busy week. U.S. stocks and global indexes are down modestly this morning as markets await a busy week of Federal Reserve (Fed) speakers. Fed Chair Jerome Powell will give his semi-annual testimony before House and Senate committees tomorrow and Thursday, respectively. Detailed minutes from the Fed’s June 18-19 policy meeting will also be released tomorrow. Market participants will be trying to gauge how a strong June jobs report has impacted prospects of rate cuts over the rest of the year. The Fed’s policy committee next meets July 30-31

Small business optimism falters, but remains elevated.
The National Federation of Independent Businesses (NFIB) Small Business Optimism Index for June fell for the first time in five months, but it remains elevated. The weakness was led by declines in sales and earnings expectations, as well as slowing expansion plans. Thirty percent of firms reported some negative impact on their business from trade disputes with China. The survey results remain in line with our expectation of continued economic growth modestly ahead of the expansion average, with trade remaining a key risk to corporate sentiment.

10-year yield snaps losing streak. A U.S.-China trade truce and upbeat economic data have put a floor in Treasury yields for now. The 10-year yield rose 3 basis points (0.03%) last week, snapping an eight-week losing streak (its longest since May 2012). Even though the 10-year yield has risen recently, it still hovers around 2%. We expect yields to rise from these levels over the long term as solid fundamentals prevail in bond market sentiment. However, uncertainty around trade, geopolitics, and global growth are primary risks to this forecast.

Strong jobs report rattles bonds. On July 5, the 10-year Treasury yield posted its second-biggest increase on a jobs report day since the beginning of 2016. Bond investors were clearly prepped for a second month of disappointing jobs data, but there wasn’t much to critique in June’s report. Today on the LPL Research Blog, we’ll examine bond investors’ reaction to the surprisingly strong June jobs report.

LPL Research in the media. LPL Senior Market Strategist Ryan Detrick was recently on Yahoo! Finance and Bloomberg Radio to discuss the stronger than expected jobs data. Please click on the links to view/listen to the interviews.

 

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