The 2019 quarter 3 markets followed much of the same trends as we’ve seen all year: markets are still strong, but with some indication for potential trouble ahead.
(Here are the first and second quarter recaps.)
All signs are positive right now, but if you look past the next couple of quarters, we could be looking at signs of a recession.
Quarter 3 2019: Some Dips Internationally
The U.S. stock and bond markets continued to perform well this past quarter, but we did see some dips in international developed stocks and emerging markets.
U.S. equities outperformed those in developed and emerging markets, and so did U.S. value stocks.
We also saw currencies around the world depreciate against the U.S. dollar, with the exception of the Israeli shekel and the Egyptian pound.
U.S. Federal Reserve Cuts Interest Rate
We did see an interest rate cut in the U.S. in September, for the second time in two months. The Fed cut rates again on Oct. 30th, but is now expected to pause moves that would ease policy.
Fed Chairman Jerome Powell said these cuts were aimed at keeping “the U.S. economy strong in the face of some notable developments and to provide insurance against ongoing risks.”
As I’ve mentioned in the first and second quarter reviews, there have been indications that a recession could be headed our way. This additional cut is another potential sign that a U.S. recession may be coming.
I’ll echo what I’ve said all year, which is that despite calm waters right now, be prepared for a shift in 2020. Indicators like the yield curve point to trouble on the horizon, and it will be interesting to see how things unfold in the new year in the U.S. and internationally.
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