Please find the next blog in our monthly series that provides a review of the prior month’s market data, the state of the economy, and the global financial markets. Global Economy: The pace of recovery has slowed over the summer with an increase in infections, but high-frequency economic data continues to show growth. While the US has managed to reduce its daily case count from the July peak, Europe now faces a virus resurgence brought on by easing restrictions and summer travel. Fed policy is likely to remain accommodative for the foreseeable future, but new fiscal support remains elusive as…

Rates In its last scheduled meeting before the US presidential election, the FOMC voted to keep the Fed Funds target rate unchanged within the 0.00% to 0.25% range. This outcome was widely expected. Two members of the committee voted against the decision on the basis of differences with longer-term policy plans. The forward guidance on monetary policy indicated strong support within the committee for maintaining the current target range through 2023. Inflation The statement added language reflecting Chairman Powell’s announcement in late August that the Fed would transition to an average inflation targeting methodology with respect to its 2% inflation…

Please find the next blog in our monthly series that provides a review of the prior month’s market data, the state of the economy, and the global financial markets. Global Economy: Economic data is reflecting a slowdown in the pace of recovery following an increase in US virus cases and a fall in consumer confidence. Cases of the disease continue to surge in many countries, including regions which had shown success in suppressing initial outbreaks. The bull case rests on the efficacy of fiscal and monetary policy support, the economic recovery regaining momentum, the avoidance of further “second wave” infections,…

Summary of the Fed’s Statement: As expected, rates were held steady and the Fed reaffirmed its dovish forward guidance. The statement was largely unchanged from the June edition, acknowledging the pick-up in economic activity but noting “The path of the economy will depend significantly on the course of the virus.” Powell repeated this point in his post-statement press conference, pointing to high-frequency data which indicated slowing growth as virus cases spike. The Fed will continue QE asset purchases of Treasury and mortgage bonds at least at the current pace. Notably, Fed officials did not adopt forward guidance linking any future…

Background 2019 closed out another year of US equity (S&P 500) outperformance vs. its non-US counterpart, (MSCI ACWI ex US). In fact, the S&P 500 has outperformed the MSCI ACWI ex US index in eight of the last ten calendar years. This persistence may lead investors to question the relevance of maintaining a globally diversified equity portfolio. Notwithstanding this recent US outperformance, there are multiple factors to consider, including similar extended periods of non-US equity outperformance in the past, differences in sector compositions within the indexes, the impact of the US dollar, and narrow leadership within the US markets. Recent…