Weekly Market Update – Oct. 15, 2018

Last Week

  • All major regions finished the week with declines as rising U.S. bond yields continued to pressure equities. U.S. equities struggled the most, returning -4.2% followed closely by non-U.S. developed market equities (-4.0%). Emerging market equities performed best of the major regions but still dropped 2.2%
  • Federal Reserve Chair Jerome Powell’s hawkish comments in the first week of October led to higher rates that continued into last week with the 10-year Treasury touching a 7-year high of 3.26%
  • U.S. inflation comes in soft
  • Technology stocks dropped 4.8% last Wednesday – the sector’s worst trading day since 2011

This Week

  • Investors will closely follow how tariffs, cost pressures across commodities, labor and logistics impact corporate margins as earnings season continues. The financials and health care sectors will be a focus this week with Johnson & Johnson (JNJ), UnitedHealth Group (UNH), Bank of America (BAC) and American Express (AXP) reporting earnings
  • Global inflation expected to remain relatively stable as inflation figures from Europe, Japan, and China will be posted throughout the week
  • September Fed meeting minutes will be released with special attention paid to whether four more rate hikes are expected through the end of 2019

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