NDS Weekly Commentary 10.1.18 – Fed Continues to Raise Rates

October 1, 2018

Markets closed the third quarter on a sour note with global equities declining modestly for the week. The DJIA closed lower by 1.07% while the broader-based S&P 500 was off 0.51%. International equities also closed the week in the red with developed international and emerging markets off 0.85% and 0.25%, respectively. Treasury yields closed slightly lower on the week, as the 10yr US Treasury yield closed at 3.05%. Gold continued to hover around $1200/oz. while oil prices jumped as investors questioned the impact of possible sanctions against Iran.

The FOMC two-day policy meeting concluded Wednesday with the committee voting unanimously to raise the benchmark rate by 25bps. This marks the third rate hike in 2018 with another likely increase in December. The Federal Reserve Chairman Jerome Powell reaffirmed the Fed’s outlook for gradual hikes while describing the US economy as strong. Noteworthy in the Fed’s comments was the removal of the word “accommodative” when referring to future actions … increasing the odds of a rate hike in December.

In the week ahead, look for economic releases on manufacturing, trade, car sales, and employment. It appears that progress is being made on a revised NAFTA agreement with Mexico and Canada. Most news coverage will continue to be focused on the nomination of Judge Kavanaugh to the Supreme Court; however, this will continue to have very little effect on the market as investors continue focusing on positive company earnings and strong economic fundamentals. As always, we suggest ignoring the day-to-day noise of the markets and get out and enjoy the beautiful colors that Fall brings.

“Autumn’s the mellow time.” – William Allingham