Key Takeaways
- S&P notches another record
- U.S. services sector expands
- UK bond yields spike
On this week’s edition of Market Week in Review, Global Chief Investment Strategist Paul Eitelman discussed new records for the U.S. stock market as well as the resilience of the American economy. He also covered bond-market volatility in Japan, France and the UK.
Turning 21
Eitelman began by noting U.S. stocks kicked off September on a strong note, with the S&P 500 outpacing global peers and gaining approximately 0.6% through Thursday. In the process, the benchmark index set yet another record high, he said.
“Thursday’s close of 6,502 was the 21st record close for the S&P this year. That’s a pretty impressive feat for an index that was teetering on the edge of a bear market in April,” Eitelman remarked.
Steady Eddie
Some of the recent gains can be chalked up to ongoing signs of economic resilience, Eitelman said. He explained the Institute for Supply Management’s (ISM) purchasing managers’ index (PMI) for the services sector climbed further into expansion territory in August, rising nearly two points from July.
“This was the highest number we’ve seen since February,” Eitelman said, calling it an encouraging sign for U.S. businesses. He noted the August numbers also improved on the manufacturing side, although that sector remains in contraction.
The latest data on private-sector job growth, job openings and layoffs also points to a resilient economy, Eitelman said. “These numbers were neither strong nor weak, but steady—reaffirming our view of a U.S. economy that is shaken, not stirred,” he remarked.
Bonds in Flux
Eitelman concluded with a look at the recent volatility in bond markets. The 30-year yield on Japanese government bonds hit a record high this week, while French bond yields also spiked due to political uncertainty. Meanwhile, 30-year UK gilt yields soared to the highest levels since the late 1990s on rising growth fears and budget concerns.
“We see both risks and opportunities in this bond selloff. Strong governance and adherence to a clear process will be critical in this type of environment,” Eitelman said, stressing the bond-market volatility is likely here to stay.
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