- 10-year Treasury yield holds above 3%. The 10-year Treasury yield again broached the 3% level last week, and unlike previous instances, it managed to stay above that level for the entire week, indicating Treasuries may have moved into a new range. As we discussed in last week’s Bond Market Perspectives, yields at current levels, while a step in the right direction for savers, are not yet high enough to put significant stress on the economy.
- What’s behind recent emerging market debt weakness? The Bloomberg Barclays Emerging Markets Sovereigns Index, an index that tracks dollar-denominated emerging market debt (EMD), has lost 3.3% over the past month. What is responsible for the weakness? Not all EMD countries are created equal, but rising rates and recent dollar strength has been a headwind for the asset class in general. We take a deeper look at EMD in this week’s Bond Market Perspectives, due out later today.
- Yanny or recession? Just as people are divided on whether they hear Yanny or Laurel, many are equally divided over if a recession is near. Even though we all have the same information, opinions are all over the board regarding the lasting strength of the economy. Today on the LPL Research blog we take a closer look at the debate.
- Another new high for small caps. The Russell 2000closed at yet another new all-time high yesterday, the fourth in a row. This is the longest streak of new highs since a streak of five to kick off 2018. For the year, there have been 14 new highs for the Russell 2000 and 14 for the S&P 500 Index. The Russell 2000 is up 6.6% for the year, versus a 2.2% gain for the S&P 500. Sparking the strength in small caps has been a better economy, tax reform, fear over trade tariffs, and a stronger U.S. dollar. We came into 2018 anticipating small cap outperformance and think this strength can continue.
Monitoring the Week Ahead
- Japan: Nikkei Japan Mfg. PMI (May)
- New Home Sales (Apr)
- FOMC Meeting Minutes (May 2)
- UK: CPI & PPI (Apr)
- Eurozone: Consumer Confidence (May)
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Index data obtained via FactSet
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