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Market Recap week ending 9/6/2019

-Darren Leavitt, CFA

Last week, the markets had their second consecutive weekly advance.  More constructive headlines on trade negotiations between the US and China helped market sentiment.  During the week China announced that trade negotiations would resume in Washington in early October.  Additionally, Hong Kong officials announced that they would no longer pursue the controversial extradition law- this was viewed as a positive by investors as it likely takes one of the potential obstacles off the negotiation table.  Another geopolitical event that influenced markets last week was the move by the UK Parliament to block a no-deal Brexit.  The move put a strong bid into Sterling and also strengthened the Euro relative to the US Dollar.

The S&P 500 trade 1.85% higher on the week while the Dow increased 1.65%, the NASDAQ added 1.63%, and the Russell 2000 gained 0.69%.

Treasuries had a volatile week induced by a mixed bag of economic reports.  Early in the week, ISM manufacturing data came in below expectations at 49.1% versus consensus of 51.3%.  A reading under 50 signals contraction and adds to the concern on global growth.  The Fed Beige Book released on Wednesday indicated that economic activity from all of the districts showed expansion at a modest pace.  ADP employment figures were announced on Thursday and came in at a robust 195k versus the consensus estimate of 150k.  Additionally, ISM Non- Manufacturing came in at 56.4% above the 54% consensus estimate.  The better than expected number showed a nice increase within new orders.  Finally, Friday’s Employment Situation Report was mixed.  Nonfarm Payrolls came in at 130k versus expectations of 171k and Nonfarm Private Payrolls data also missed the mark coming in at 96k versus consensus estimates of 145k.  The unemployment rate held steady at 3.7%, and wages increased 3.2%.   For the week the 2-year yield gained two basis points to close at 1.52%, and the 10-year bond yield added four basis points to close at 1.55%.

Oil had a positive week closing higher by 2.5% at $56.45 a barrel.  Gold lost $14 to close at $1515 an Oz.  There were no changes to our models last week.

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