Capital Markets marked time and fluctuated largely sideways after posting sharp gains in the first month (July) of the 3rd Quarter.
The 10-year US Treasury yield crept up to 1.6% after falling to 1.36% earlier in the quarter. The longer end of the curve remained less steep with the 30 Year note yielding just 2.32%. It began the quarter yielding 2.29%, so it hardly budged. Municipal bond prices moderately declined during the quarter but traded down less than -0.31%. Inflation Protected Treasuries advanced 1.42% and is now up 6.58% year to date. The US Aggregate bond advanced by .46% and ended the quarter with a 5.80% year to date gain. Comments from the Federal Open Markets Committee suggest a rate hike is in play by the end of year.
The Russell 2000 rose 8.66% during the quarter with nearly 70% of the advance occurring in July. The DJIA and S&P 500 registered slightly negative returns during the months of August and September after rising 2.8% and 3.56% respectively in the month of July. The US broad market advanced by 4.48% during the third quarter. Information Technology handily outperformed while utilities and telecom underperformed.
Emerging markets were positive in all three months of the quarter advancing by 8.32%. Developed International rose by 5.8% but, still remain in the red for the year -0.85%. (Excluding dividends). Emerging markets have outperformed since the Brexit vote.
Gold closed slightly lower ending the quarter at $1,313.30 after beginning the quarter at $ 1,318.40 per ounce. Similarly, oil jumped back to the $48 level where it began the quarter after OPEC officials publicly disclosed that they would be reducing production. Real estate investments, gold and other interest rate sensitive investments have now stalled earlier year to date advances, as the market seems somewhat concerned of the real possibility of an interest rate hike prior to year-end.
As one may surmise, the Presidential race has recently weighed on US markets. As public polls, tightened markets took notice. In recent days a Clinton poll bounce following the initial debate has clarified the election outcome somewhat; a determination that the market in general would welcome. However, over longer periods, we would suggest that history has shown that market performance is largely independent of the political party holding the Presidency. Companies, and in turn the market, will adapt no matter whom wins. It is the fundamentals that really matter for investors – corporate earnings driven largely by revenues.
CRA FINANCIAL LLC