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Ivan Gruhl, Chief Investment Officer, HK Financial Services

Overview: Stocks across the globe are off to a strong start to the year. Globally, stocks have been led by emerging markets, up about 9%, U.S. S&P 500 up about 8%, and international developed stocks up about 6.5% on the year. U.S. equities were up 1.6% last week, as the S&P 500 index has benefited from generally good earnings, strong job growth and a cautious Federal Reserve. On Wednesday, the Fed left short interest rates unchanged at 2.5% and emphasized a more cautious approach to future hikes. The futures markets are now pricing in no rate hikes for the rest of 2019.

Treasury rates are now about where they were at the end of 2018, with the 2-year closing the week at 2.51% and the 10-year at 2.69%. Economic data releases have been sporadic and delayed in many cases, but we did see a strong jobs report Friday. Jobs data showed the creation of 304,000 vs. an expectation of 172,000. The report should be taken with some caution however, as last month’s numbers were revised downward from 312,000 to 222,000. The unemployment rate edged up 0.1% to 4.0%, possibly due in part to the government shutdown.

Across the pond, European area real gross domestic product expanded by 0.2% in the fourth quarter and was up 1.8% year-over-year. Growth in France and Spain was above expectations, while growth in Italy registered negative for a second consecutive quarter.

This communication is for informational purposes only. It is not intended as investment advice or an offer or solicitation for the purchase or sale of any financial instrument.

Indices are unmanaged, represent past performance, do not incur fees or expenses, and cannot be invested into directly. Past performance is no guarantee of future results.

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