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Overview:  U.S.-China trade relations continued to dominate markets last week. Stocks retreated from their multi-week rally, with the S&P 500 down about -0.3% for the week.  Midway through the final quarter, major stock indices around the globe are up between 4-5% since October 1 and remain solidly in positive territory for the year-to-date. U.S. Treasury yields fell in a flight-to-safety trade last week, ending with the 10-Year down 6 basis points (bps) to 1.77% as progress on the “phase one” deal stalled.  Yields have fallen almost 1% across the yield curve in 2019.  For example, the 10-year Treasury began the year at 2.7% (now 1.77%), and the 2-year Treasury has improved to 1.62% from a starting level of 2.5%.  Bond prices have benefited as a result, with the taxable Bloomberg Aggregate Index up about 8.6%, and the Bloomberg Municipal Index up 7% year-to-date 2019.

Last week’s U.S. economic reports were encouraging, as the purchasing managers indices (PMI) for manufacturing and services rose to multi-month highs.  Strong corporate earnings reports led by the likes of Target and Lowe’s indicate consumers continue to support economic growth.  October’s FOMC meeting minutes released mid-week reinforced the Fed’s “wait-and-see” approach, with most members indicating the three 0.25% cuts to the fund’s rate in 2019 as sufficient.

This week:  The Thanksgiving holiday-shortened week may see a slowdown in trading activity.  Investors will evaluate trade data on Tuesday, and a plethora of data on Wednesday, including durable goods, the third-quarter GDP report, and consumer spending and personal income.  Progress in the much-anticipated trade deal will remain a focus.

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. 2843927