Of Rocket Men and Dotards
Weekly Commentary, September 22nd, 2017
- Equity markets were surprisingly flat this week, both day to day and week over week, with the S&P 500 +0.10% and International Stocks (EFA) +0.48%.
- Fixed income markets also remained essentially unchanged throughout the week with high-quality bonds (AGG) down slightly at -0.13% and high-yield bonds only up slightly at +0.08%.
- Federal Reserve Announcements - As expected, the Federal Reserve announced that it will start looking to shrink its $4.5 trillion balance sheet in October. Projections for an interest-rate increase in December ticked upwards based on the committee’s comments that it expects to hike rates one more time this year. The news pushed the dollar higher and lifted benchmark treasury yields. However, Chair Janet Yellen also admittedly labeled the surprising weakness in inflation this year as a “mystery” which could leave the door open to delay a rate hike. Overall current monetary policy remains quite accommodative (see chart below at the end of The Facts section).
- S&P 500 Dividend Payments– continue to trend higher according to the report this week, with payments in Q2 of over $104 billion, which was the third consecutive quarter of +$100 billion in payouts. Payments were up 4.54% year-over-year.
- Commentary: The lack of market volatility continues to surprise many investors given the level of geopolitical uncertainty in the world. We recap the madness, and briefly explore a few reasons why markets are holding up so well.
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