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Weekly Commentary

ND&S Weekly Commentary 6/24/19 – Easing Ahead

Last week at the June FOMC meeting the Federal Reserve decided to maintain the target range for Fed funds at the 2.25%-2.50% rate. However, they did abandon the word patience in the minutes and replace it with “will act as appropriate to sustain the expansion” implying easing ahead. Most economists now are predicting a rate cut at the July meeting with a possible second cut later in the year. As a result, global equity markets continued their advance with the S&P 500, DJIA and NASDAQ up 2.22%, 2.41% and 3.0%, respectively. International developed markets and emerging markets advanced 2.22% and 3.84%. For the week, the best performing sectors were energy, technology and healthcare. Energy stocks got a boost last week as Iran continues to rattle the Mid-East by shooting down a U.S. drone over the Strait of Hormuz. Look for volatility to continue for the near-term and maintain your diversified asset allocations.

In fixed income, bond prices also got a boost from easing comments from the Fed and the ECB. The 10 year U.S. Treasury finished the week at a yield of 2.07%, which was down from 2.09% and at one point traded below 2.0%. This week look for economic reports on consumer confidence, new home sales and durable goods orders.

“There is no risk-free path for monetary policy.”Jerome Powell

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