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Overview:  Global stocks continued their upward trajectory last week in a quiet, pre-holiday trade. Several recent events have contributed to market optimism.  First, the Federal Reserve left short rates unchanged in their meeting December 10-11, and indicated no change in the fed funds rate (currently 1.50%-1.75%) for the foreseeable future. This allows investors to focus on the fundamentals, and on renewed optimism for stronger economic growth in 2020. Second, the U.S.-China trade tensions have de-escalated, with the Phase 1 agreement between the two countries. Despite the lack of details on the agreement’s terms, President Xi has stated that the agreement is good for both countries and he looks forward to a formal signing. Third, the U.S. House passed the U.S.-Mexico-Canada agreement (USMCA) with bipartisan support; this provides a positive path for North American trade. Finally, the path for Brexit also became clearer with the convincing victory for the conservatives in the U.K. elections held on December 12. Last Friday, the U.K. Parliament voted in favor of Prime Minister Boris Johnson’s withdrawal agreement to leave the EU on January 31. As Prime Minister Johnson commented, the country is now “one step closer to getting Brexit done.”

In bonds, U.S. Treasury yields rose on the back of economic optimism and the easing of the above concerns. 10-Year Treasury yields ended last week at 1.92%, 0.14% higher in yield for the month-to-date. Looking ahead, positive economic data led by consumer spending and business activity, provide continued optimism as we head into 2020.  We expect a slow trade this week, with sparse economic data on the calendar (key U.S. New Home Sales comes out December 23).  A change in status of the U.S.-China trade dispute still has the power to jolt the markets, but the backdrop of low interest rates, a strong labor market, and steady consumer spending supports ongoing growth of the U.S. economy.

Weekly Returns and Data


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. 1577113277718