ND&S Weekly Commentary 11/11/2019 – Happy Veterans Day

November 11, 2019

U.S. stocks reached fresh record highs last week as investors’ hopes for a China trade deal rose. The DJIA, S&P 500, and NASDAQ were up 1.4%, 0.9%, and 1.1%, respectively. International markets were also positive as developed markets (MSCI EAFE) advanced 0.5% and emerging markets (MSCI EM) 1.5%. Consumer spending and jobs data as well as corporate profits that have exceeded expectations have tempered fears of an economic slowdown. So far, 72.5% of companies reporting surpassed earnings per share (EPS) estimates while 57.9% beat on revenues. As a result, cyclical stock sectors were the best performers for the week with financials, energy, and materials making the biggest moves. This week look for economic reports on CPI, retail sales and industrial production.

In fixed income, U.S. government bond yields had their biggest weekly advance in yields in a month. The 10 year U.S. Treasury note ended the week at 1.93%, its highest rate since July 31st. The yield curve is no longer inverted (as shown in the chart below from the Wall Street Journal). This week all shorter dated treasuries yielded less than longer ones for the first time since November 2018 helping to relieve concerns about a possible recession.

On this Veterans Day, we thank all those who have honorably served our great nation. We are especially grateful for all those service members who never returned home as we are reminded of the inscription on the Tomb of the Unknown Soldier – “Here rests in honored glory an American soldier known but to God”