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Market Recap Week ending 8/9/19

-Darren Leavitt, CFA

It was a turbulent week for investors as uncertainty on trade escalated between the US and China.  Markets started the week deep in the red with the worst single-day performance of the year on news that the Chinese had let the Yuan depreciate beyond the critical threshold of 7.  The US swiftly responded to the depreciation by officially labeling China as a currency manipulator.   Adding fuel to the fire, the Chinese also announced that it would cease buying agricultural goods from the US.  The realization that trade negotiations between the two countries are getting worse, not better, dampened global growth expectations, and induced investors to sell risk assets and seek safe-haven assets.  Despite a terrible start to the week markets stabilized mid-week.

For the week, the S&P 500 fell -0.46%, the Dow lost -0.75%, the NASDAQ shed -0.56%, and the Russell 2000 gave up -1.34%.  The yield curve continued to flatten last week, and at one point the 2-10 spread was at levels not seen since 2007.  The 2-year note yield fell 8 basis points to close at 1.63% while the 10-year bond yield fell 13 basis points to close at 1.73%.  The action in treasuries seemed only to reinforce global growth concerns and stoked recession rhetoric from some prominent market pundits.  Oil fell nearly 2% to $54.61 a barrel, the move down came despite constructive supply comments out of Saudi Arabia.  A safe-haven bid into Gold continued the metal’s recent ascent.  Gold gained $51 or 3.5% and closed at $1508 an Oz.  There were no changes to the models last week.

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