Webinar
Fall 2024 Post-Election Webinar
Gauging the market impact of election results.
9.5%
The increase in housing starts in August, after a 7% decrease in July.
Infrastructure stocks
The term infrastructure refers to the basic physical systems of a business, region or nation. These systems tend to be capital intensive and high-cost investments, and are vital to a country's economic development and prosperity. This can include transportation systems, communication networks, sewage, water and electric systems.
Recent performance reflects a risk-on bias. The S&P 500 ended last week up 19.6% for the year, with all 11 sectors in positive territory, nine of which are up 10% or more. Also noteworthy is the improving performance in September, historically the worst-performing month of the year. For the month as of Friday’s close, the index is up 1.0% after being negative prior to last week; seven of 11 sectors are posting month-to-date gains.
― Terry Sandven, Portfolio Manager, Chief Equity Strategist, U.S. Bank
Quick take: U.S. consumer spending remains stable, and lower interest rates appear to be helping the housing market recover. However, weaker spending and continuing housing market struggles indicate Chinese economic activity remains soft.
Our view: The global economy continues to see moderating growth, especially across manufacturing activity, and inflation continues to decelerate. Despite higher interest rates, the U.S. Bank Economic Team sees conditions consistent with a soft landing in the U.S.
Quick take: U.S. equity performance reflects a risk-on (more aggressive) bias following weakness earlier in the month. Valuations, while elevated, are supported by moderating inflation, lower interest rates and rising earnings.
Our view: Inflation is falling, interest rate cuts are in motion and earnings are trending higher, all of which help provide valuation support. Near-term, broad market volatility is likely to remain more the norm versus exception due to elevated valuations, limited company information flow and ongoing election-related nuances.
Quick take: Riskier high yield corporate bonds performed well last week, with the Federal Reserve’s (Fed) decision to cut interest rates 0.50%, boosting investor sentiment. Short-term Treasury yields fell in response to the larger-than-normal rate cut, but long-term yields rose due to investor concerns that easier monetary policy could rekindle inflation.
Our view: Blends of diversified high-quality bonds offer opportunities to lock in yields above 4% before the Fed cuts interest rates further. Modest supplemental exposures to riskier high yield bonds and unique bond types such as non-agency mortgages and reinsurance can further improve return potential in fixed income portfolios.
Quick take: Real assets trailed the broader market last week, with higher long-term interest rates dampening prices despite the Fed cutting its short-term interest rate target. Real Estate was the worst-performing sector. Commodity markets were led higher by the energy industry, but all sub-sectors posted positive as investors sought protection from the risk of rekindled inflation.
Our view: Tangible assets with stable cash flows present relative value opportunities should recession fears increase. Commodities could trade higher if a more dovish Fed leads to greater inflation.
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With the U.S. government’s authority to borrow money bumping up against the federally mandated debt limit this year, is a political confrontation brewing that could impact capital markets?
Persistently higher prices continue to weigh on consumers and policymakers alike.