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Market Update: Tue, Mar 26, 2019

Market Update: Tue, Mar 26, 2019

| March 26, 2019
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Market Update: Tue, Mar 26, 2019 | LPL Financial Research


Daily Insights

Fed presidents comment on yield curve inversion, balance sheet plans. Chicago Federal Reserve (Fed) president Evans acknowledged investors’ concerns about the recent yield curve inversion and noted the Fed is watching closely, though he suggested structural changes (lower trend growth and lower real interest rates) and the secular (long-term) downtrend in long-term interest rates indicate a flatter yield curve is more natural. Though not dismissive of its importance, he reiterated his confidence in his growth outlook for the U.S. economy (~2%) amid “good” economic fundamentals. Meanwhile, Boston Fed president Bostic, a voting member of the FOMC, opined that increasing the share of (short term) Treasury bills and reducing the duration of the Fed’s holdings more quickly is important so that it can better respond to the next significant downturn.

Ominous signal? Bonds are sending a potentially ominous signal about the U.S. economy. The 10-year Treasury yield fell below the 3-month Treasury yield on March 22, the first time that part of the yield curve has inverted since August 2007. Yield curve inversion typically reflects economic pessimism in rates, and has preceded each of the nine recessions going back to 1955, but should investors brace for an economic downturn? We don’t think so, as we’ll explain on the LPL Research blog later today.

Housing data disappoints, but demand elements are there. Building permits and housing starts data for February came in below both prior month readings and consensus expectations, but note that month-to-month data can be volatile and is often subject to large revisions. February’s 8.7% drop in housing starts came with a 10.3% margin of error, for example. New starts also remain near cycle highs, while multifamily construction dropped largely due to a surplus of available apartments in certain metro areas. Challenges remain in the housing industry, but the economic backdrop remains strong with unemployment at cycle lows and wage growth at cycle highs.

NEW Market Signals podcast. In this week’s podcast, LPL Chief Investment Strategist John Lynch and Senior Market Strategist Ryan Derick discuss moving equity allocation to market weight, the bond market, and some positive economic news. Subscribe to the free Market Signals podcast series on iTunes, Google Play, Spotify, or wherever you get your podcasts!


Click Here for our detailed Weekly Economic Calendar



  • Trade Balance (Jan)


  • GDP Report (Third Revision, QoQ Q4 2018)
  • Initial Jobless Claims (March 23)
  • Pending Home Sales (MoM, Feb)
  • Eurozone Economic Confidence Index (Mar)
  • Germany CPI Report (Mar)
  • Japan Jobless Rate (Feb)
  • Japan Tokyo CPI Report (Mar)
  • Japan Industrial Production (Preliminary Feb)
  • Japan Retail Sales (Preliminary Feb)


  • Core PCE (MoM Jan)
  • New Home Sales (MoM Feb)
  • University of Michigan Sentiment Index (Mar)
  • Germany Unemployment Claims Rate (Mar)
  • UK GDP Report (Q4 2018)
  • Eurozone CPI Report (Mar)
  • Canada GDP Report (Jan)



The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

All company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All performance referenced is historical and is no guarantee of future results.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

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Index data obtained via FactSet


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