Quarterly review of financial planning assets

2nd Quarter Review and Mid-Year Outlook

By Eric Wymore CRPS©

The S&P 500 returned 4.3%* during the second quarter of 2019. The year-to-date return of 18.5%, for the first half of the year, is the highest return since 1997. The primary driver for the increase were due to the speculation that the Federal Reserve would cut interest rates as well as an announcement of a tariff cease-fire between the China and US. Fixed Income also saw gains during the 2nd quarter with the Bloomberg Barclays U.S. Aggregate Index increasing by 3.1%. Most of this return was due to the healthy credit environment and lower interest rates which increases the price of bonds.

A Look Forward
At the halfway point of 2019, the U.S. economy has held steady, supported by the continued effects of fiscal stimulus and growing corporate profits. At the same time, trade tensions are weighing on the economic outlook, and slowing global growth and ongoing political uncertainty have forced global central bankers to extend extraordinary support. We still believe fundamentals are supportive of moderate U.S. GDP growth this year. We believe fiscal stimulus from the Tax Cuts and Jobs Act of 2017, along with decreased regulation and increased government spending, will continue to support the U.S. economy. Fixed income investors have benefited from falling rates due to subdued consumer inflation, a pause in Fed rate hikes, and demand for U.S. Treasuries. Factoring in our expectation for progress on trade, we look for the 10-year Treasury yield to reach the 2.5–2.75% range in the next 6 to 12 months. Market valuations remain favorable and within historical norms.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly

*Source: LPL Research, figures for the S&P 500 Index are total returns from 03/31/2019-06/30/2019