Week in Review

Week in Review: September 24, 2018

Rates — Take a Hike!

U.S. equities displayed resiliency to the latest trade war escalations between the U.S. and China, as the S&P 500 reached another milestone all-time high, surpassing its last record set in August. While the equity markets experienced some volatility through the week due to President Trump announcing a new set of tariffs on China, investor sentiment remained optimistic backed by positive U.S. economic results. 

Investors were able to shake off trade escalations supported by robust employment data reported on Thursday, as concerns of a global economic slowdown abated. The U.S. Department of Labor stated the weekly number of Americans filing for unemployment benefits fell to 201,000 during the second week of September. While a poll conducted by Thomson Reuters had estimated the figure at 210,000, the actual weekly figure marked the lowest level in almost 50 years. The strong jobless claims data served as a catalyst driving a broad based rally which also lifted international equities, helping the MSCI Emerging Markets Index recover some losses from the previous week. Emerging markets were further supported by a lower U.S. dollar. While the tariff levels came in lower than expected, helping alleviate some trade concerns, investors embraced the latest employment data as evidence that momentum in the U.S. economy remains robust.

While investor optimism drove some equity indexes to new highs, lower demand for safer assets including U.S. Treasuries contributed to a selloff in the bond market. In addition, municipal yields also rose, as the selloff extended to tax-exempt securities. Supported by backdrop of rising wages, record corporate profits, and positive employment trends, the yield on the benchmark 10-year U.S. Treasury note climbed past its historical 3% mark, reaching 3.10% on Thursday; its highest level since May.

Meanwhile, the yield on the two-year Treasury note reached its highest level in more than a decade, partially due to investor appetite shifting away from safer assets. The Treasury yield curve widened this week, as the gap between the 2-year and 10-year Treasury notes expanded by 5 basis points. While trade negotiations between the U.S. and China have taken center stage in recent months, driving concerns amongst some market participants of the possibility a global economic slowdown, the U.S. economy has yet to show any signs of slowing down. Economic data continues to show positive momentum into the third quarter, providing evidence which validates our position that economic indicators still do not signal an economic downturn in the near term. 

Market Returns (USD)





Global Equities

MSCI All Country World

1.6% 4.9% 4.5% 10.7%

S&P 500

0.9% 8.3% 11.1% 19.4%

Dow Jones Industrial Average

2.3% 10.8% 10.0% 22.3%


-0.3% 6.6% 16.6% 25.7%

Russell 2000

-0.5% 4.5% 12.5% 20.1%


2.9% 2.3% -0.6% 4.1%

MSCI Emerging Markets

2.3% -0.8% -7.4% -2.9%

Fixed Income

ICE BofAML Municipals 1-10 Year A-AAA 

-0.2% -0.1% 0.0% -0.6%

Bloomberg Barclays Intermediate Government/Credit

-0.1% 0.1% -0.9% -1.1%

Bloomberg Barclays High Yield Bond

0.1% 2.2% 2.4% 3.2%

JPMorgan GBI Emerging Markets Global Diversified

1.6% -2.8% -9.0% -9.2%

Market Levels


Week Ago

Year End

Year Ago

S&P 500

2929.67 2904.98 2673.61 2500.6

Dow Jones Industrial Average

26743.5 26154.67 24719.22 22359.23

10-Year U.S. Treasury Yield (Constant Maturity)

3.07% 2.99% 2.40% 2.27%

Gold ($/oz)

$1,200.04 $1,194.85 $1,302.80 $1,291.20

Crude Oil ($/barrel)

$70.78 $68.77 $58.38 $51.36

U.S. Dollar / Euro ($/)

1.17 1.16 1.20 1.19

U.S Dollar / British Pound ($/£)

1.31 1.31 1.35 1.36

Japanese Yen / U.S. Dollar (¥/$)

112.59 112.06 112.69 112.48
What's Important

Treasury yields rose as investors weighed trade tariff news against economic data

Emerging market equities closed higher supported by a weaker U.S. dollar