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Weekly Market Review: October 14, 2019

first_imgThe U.S. Treasury Department has auctioned off 30-year government bonds since 1977. The lowest yield ever on our nation’s 30-year paper occurred this summer when the yield dropped to 1.94% on 8/28/19. Last Thursday’s $16 billion quarterly auction (10/10/19) of new 30-year bonds was priced at a 2.17% yield, the lowest yield ever on an initial purchase of the Treasury long-bond (source: Treasury Department).Low treasury yields suggest bond traders are pricing in a weak outlook for inflation. The “consumer price index” (CPI) was flat in September and was up just +1.7% on a trailing one-year basis through 9/30/19. From 1966-1991, the CPI was up at least +3% in 25 of 26 years. More recently, the CPI has been up at least +3% in just one of the last 13 years, i.e., 2006-2018 (source: Department of Labor).The beneficiary of low-interest rates and low inflation: anyone borrowing money, from first-time home buyers to the largest multinational corporations. More corporate bonds (by dollar amount) were issued globally ($434 billion) in September 2019 than in any month in history, fueled by historically low worldwide interest rates (source: Dealogic).Notable Numbers for the Week:RARELY DOWN – The bond market has had just thee down years in the last 40 years, i.e., 1979-2018. The bond market is up +8.2 YTD (total return) through last Friday 10/11/19. The Bloomberg Barclays Aggregate bond index, calculated using 6,000 publicly traded government and corporate bonds with an average maturity of 5 years, was used as the bond measurement (source: BTN Research).HALF-AND-HALF – The United States government has maintained financial records since 1789, i.e., for the last 230 years. As of 5/31/09, the U.S. had amassed a national debt of $11.3 trillion. As of 9/30/19, the U.S. had amassed a national debt of $22.7 trillion. Thus, the U.S. government has accumulated as much debt in the last 10 years ($11.4 trillion) as it accumulated in its first 220 years ($11.3 trillion) (source: Treasury Department).WE THE PEOPLE – As of the end of September 2019, 158 million Americans were working and had full-time jobs and 6 million Americans were out-of-work, a total of 164 million Americans who were either working or looking for work. Another 166 million Americans are either too young to have a job or they have retired from the workforce. Adding both groups together makes up our nation’s population of 330 million (source: Department of Labor).JAPAN IS OUT, CHINA IS IN – In 2008, China’s economy ($4.5 trillion) was smaller than Japan’s ($4.9 trillion). In 2019, China’s economy ($14.2 trillion) is nearly triple the size of Japan’s ($5.2 trillion) (source: Focus Economics).last_img read more

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