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Ivan Gruhl, Chief Investment Officer, HK Financial Services

Overview: 

Stock markets declined last week, posting their worst week of performance this year. The S&P 500, the MSCI international, and the MSCI EM markets all lost about 2% for the week. Three main catalysts drove the trade. First, there were no new developments in U.S.-China trade, with no official schedule for future talks. Second, weaker economic signals from Europe and China were in the news, with the ECB revising growth downward for the Euro bloc, and China reporting a surprising 20% decline in exports for the month of February. Finally, a disappointing jobs report showed the economy added only 20,000 jobs, vs. an expectation of 180,000. On the positive side, productivity rose 1.9% in the fourth quarter, the highest level since 2010; with productivity considered a key for continued economic expansion.

Yields fell on the week, with the 10-year Treasury down 13 basis points to a yield of 2.62%. The benchmark Aggregate Bond Index is now up 1.50% for the year-to-date. Looking ahead, volatility is likely to remain above average as the markets look forward to the next round of earnings and economic data that includes CPI, PPI, and durable goods reports. Finally, markets should be encouraged by the retail sales number that was just released (7:30 CST Monday 3/11) that showed above expectations increases across the board.

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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