Everything went up – and that’s unusual.

Randall Forsyth of Barron’s explained, “Like our major political parties, the stock and bond markets seem to live in two different worlds these days. The former sits at record levels, suggesting we live in the best of all possible worlds. The latter sees things as bad and only getting worse.”

Here’s what happened last week:

The Federal Open Market Committee met last week (they decide whether the central bank of the United States should push rates higher or move them lower). It left rates unchanged, but indicated a willingness to lower rates in support of economic expansion. That was music to the ears of some investors and the Standard & Poor’s 500 Index rose to a record high, reported Sue Chang and Mark DeCambre of MarketWatch.

The Fed’s song was the same as the one already playing across the world. Central bankers in Europe and Japan had signaled they were willing to encourage economic growth by easing rates lower and using other tools available, reported Leika Kihara and Daniel Leussink of Reuters. Their attitude helped push world stock markets higher.

Last week, the U.S. bond market gained value, too, as interest rates moved lower. Falling interest rates suggested bond investors were hearing a different tune. When investors are willing to accept lower yields, it suggests they’re worried about what may happen and are seeking safety. In some parts of Europe, investors are accepting negative yields – taking small losses to own government bonds they perceive to be safe – because they are pessimistic about the future.

There is plenty to be concerned about, including ongoing trade issues and conflict in the Middle East. Only time will tell how recent events will affect the U.S. and world economies.

Sources:

https://www.barrons.com/articles/low-interest-rates-could-have-surprising-benefits-51561165445?mod=hp_DAY_1 (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/06-24-19_Barrons-Stocks_Soar_Yields_Sink_Whats_Next-Footnote_1.pdf)

https://www.marketwatch.com/story/dow-poised-to-surge-to-highest-level-in-812-months-gold-hits-5-year-high-as-fed-signals-cuts-2019-06-20

https://www.reuters.com/article/us-japan-economy-boj/bank-of-japan-joins-fed-in-signaling-easing-if-needed-keeps-policy-steady-for-now-idUSKCN1TL06C

https://finance.yahoo.com/news/global-stocks-rally-bond-yields-010510813.html

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

* These views are those of Carson Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.

* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named broker/dealer.

* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.

* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.

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* All indexes referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.

* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

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* Past performance does not guarantee future results. Investing involves risk, including loss of principal.

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* Asset allocation does not ensure a profit or protect against a loss.

* Consult your financial professional before making any investment decision.

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