Interest rates have been the primary focus of investors lately, and for good reason. A glance at the chart of the 10-year Treasury note yield below shows that while rates have been steadily declining for nearly a year, that move accelerated sharply during the last two weeks.
Article Category: Recessions
The International Monetary Fund just released their quarterly update to the World Economic Outlook, and now projects real global economic growth to slow to 3.2% this year (from 3.6% in 2018 and 3.8% in 2017). Interestingly, the main downgrades in growth were concentrated in emerging market economies, including India, Russia, Mexico and Brazil.
We saw a strong rally in global equity markets yesterday, and much of that move was predicated on an improving Chinese landscape. On Sunday, the official Chinese Purchasing Managers’ Index came in at 50.5 (for March), signaling expansion for the first time in four months. The previous reading of 49.2 represented a three-year low.
The first thing I want to mention today is that the S&P has finally cleared its overhead resistance at 2815. As you can see below, that price level turned the index back on five separate occasions. The fact that prices are holding above this mark is a good sign, as it suggests the selling pressure at this level has subsided.
Over the last few months we’ve talked a lot about the idea that it is global growth, as opposed to domestic growth, that is presenting the biggest challenges for financial markets. Unfortunately, that message remains relatively unchanged, and is creating a mixed picture for investors.
Let’s begin with a look at economic conditions abroad, and then we’ll circle back to some the not-so-bad developments here in the States.