Monthly Market UpdateSubmitted by Texas Legacy Wealth Management on July 5th, 2019
After a tough month for stocks in May, June’s performance was a welcome change with the S&P 500 up almost 7% for the month (YCharts). US stocks are currently sitting above all-time highs as of July 3, 2019; however, we still see uncertainty surrounding trade policy, the economy, and political risk. Given this ongoing uncertainty we continue to be a little cautious as we look for further clarity on the direction of the economy and stock market.
While trade, global growth and economic data continue to be important areas to watch, the shift in Fed expectations drove positive momentum for stocks during the month. After the Fed’s June meeting, investors now believe a rate cut at the Fed’s July meeting is a sure thing with probabilities for a rate cut jumping to 100% (CME FedWatch Tool). This accommodative stance was viewed positively by investors who feel accommodative policy may lead to an extension of the economic expansion. We have also seen a shift towards a more accommodative monetary approach from central banks around the world, which has contributed to lower longer-term yields (US 10-year treasury bond).
While we continue to keep a close eye on current risks, we do not see a recession on the near-term horizon, and feel that the market has the potential to move higher from here. While we believe the economy is unlikely to move into a recession immediately, we do feel that there are increased risks of a recession looking out beyond this year. We will continue to monitor trade developments, central bank policy, political and geo-political risks and will look to make changes to portfolios as we get further clarity on the evolving economic environment.
Your TLWM Team
*Investment advice offered through TLWM, LLC., a registered investment advisor.
*The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
*The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
*Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
*Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
*Past performance does not guarantee future results. Investing involves risk, including loss of principal.
*You cannot invest directly in an index.
*Consult your financial professional before making any investment decision.
*Stock investing involves risk including loss of principal.
*This document is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Texas Legacy Wealth Management and its representatives are properly licensed or exempt from licensure.
*The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
*Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
*Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
*Credit risk can be a factor in situations where an investment’s performance relies on a borrower’s repayment of borrowed funds. With credit risk, an investor can experience a loss or unfavorable performance if a borrower does not repay the borrowed funds as expected or required. Investment holdings that involve forms of indebtedness (i.e. borrowed funds) are subject to credit risk.
*Typically, the values of fixed-income securities change inversely with prevailing interest rates. Therefore, a fundamental risk of fixed-income securities is interest rate risk, which is the risk that their value will generally decline as prevailing interest rates rise, which may cause your account value to likewise decrease, and vice versa. How specific fixed income securities may react to changes in interest rates will depend on the specific characteristics of each security. Fixed-income securities are also subject to credit risk, prepayment risk, valuation risk, and liquidity risk. Credit risk is the chance that a bond issuer will fail to pay interest and principal in a timely manner, or that negative perceptions of the issuer’s ability to make such payments will cause the price of a bond to decline.