Rising Economic and Political Risks Don’t Ruffle Investors
OCT. 16, 2019
The financial markets entered the home stretch of 2019 on shaky ground—uncertainty on the economic front (slowing global growth) and the political front (trade negotiations, impeachment, Brexit) combined to heighten recession fears and fuel volatility in both the stock and bond markets.
The Federal Reserve eased market concerns with two quarter-point rate cuts in the 3rd Quarter. This quick shot of monetary policy accommodation may help extend the late expansion phase a little longer, which would be welcome news to investors. We believe rising economic and market pressures will keep the central bank in easing mode through the 4th Quarter and into 2020.
Despite the rocky headlines on the economy and the political tug-of-war, equity markets have been fairly resilient. Volatility in the 3rd Quarter was brief and directionless; by September the major stock market indexes were closing in again on record territory. Continued momentum will depend on an inflection in corporate earnings or resolution in the trade war.
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