Weekly Wrap-Up

Last Week In Markets: Mar 18 - Mar 22, 2019

Fisher Investments recaps the biggest market, political and economic news from last week, including US yield curve news, Brexit developments and Japanese PMI data.

Markets fell this week amid ongoing Brexit discussions. US data were mixed. The March Markit manufacturing and services Purchasing Managers Indexes (PMIs) fell to 52.5 and 54.8 respectively, below expectations but still over 50—signaling economic expansion. The Leading Economic Index rose 0.2% m/m in February, above expectations. January durable goods orders increased 0.3% m/m, below expectations. The Fed left interest rates unchanged at 2.25% – 2.5%, as expected. On Friday, the 3-month to 10-year yield curve inverted intraday. While headlines focused on the potential impact, yield curve inversions do not immediately portend a bear market. Additionally, the global yield curve remains positively sloped—a bullish sign that few are reporting. For more, please see our 03/22/2018 MarketMinder article, “Monetary March Madness.”

In Europe, headlines focused on Brexit. The European Union offered the UK an extension from the March 29 deadline to April 12—giving the UK Parliament additional time to pass Theresa May’s current plan or come up with an alternative. While the proceedings over the past few days may seem chaotic, we continue to march towards a Brexit resolution—which should reduce uncertainty when it comes and allow investors and businesses to move forward. For more, please see our 03/20/2019 MarketMinder article, “Today in Brexit, Day 1000.” Eurozone Preliminary March Markit manufacturing fell to 47.6, while the preliminary March Markit services PMI remained at 52.7. In the UK, February core inflation (excluding food and energy) increased 1.8% y/y. The Bank of England left interest rates unchanged at 0.75%.

Japanese February core-core inflation (excluding food and energy prices) rose 0.7% y/y. The preliminary reading of the Markit manufacturing PMI came in at 48.9, in line with estimates. The Bank of Japan also kept its short-term interest rates steady at -0.1%.

The Week Ahead:

US releases include the third revision to Q4 2018 GDP and February housing starts. The eurozone releases February eurozone money supply while the UK releases the third revision to Q4 2018 GDP. Japan publishes preliminary February industrial production and trade data.

Source for all data cited is FactSet. This update constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. No assurances are made we will continue to hold these views, which may change at any time based on new information, analysis or reconsideration. In addition, no assurances are made regarding the accuracy of any forecast made herein. Global equities are represented by the MSCI World Index. The MSCI World Index measures the performance of selected stocks in 23 developed countries and is presented net of dividend withholding taxes and uses the maximum rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.