WrapManager’s Weekly Summary of Market and Economic News
The Bellwether US 10-Year Treasury Hit 3% on Thursday
Interest rates continue to move higher as the economy recovers and as the Federal Reserve provides additional hints that they plan to “taper” their economic stimulus measures. Some people are concerned that rising interest rates could stifle the recovery of the housing market as well as general business activity.1 While that may be true to a degree, we also believe there are at least 4 Reasons Rising Interest Rates Aren't Necessarily a Bad Thing.
In Spite of Rising Interest Rates, US Auto Sales Continue Booming
In the month of August, new car sales rose 17% to 1.5 million, which is the highest level of sales since 2007. This is a good indication that the auto sector has moved past the recession and recovered in full. Analysts expect that close to 16 million cars and trucks will be sold in the US this year. Toyota, General Motors, Nissan, Honda, Chrysler, and Ford all posted double-digit gains for the month.2
UK Service Sector Data Points to Robust Recovery
Last month we reported that European manufacturing data had started to expand, and recent data shows that Europe isn’t alone. The United Kingdom posted some compelling numbers this week, with service providers showing activity rising at the sharpest pace since December 2006. What’s more, growth in new business has been recorded for eight consecutive months, and the latest increase was the sharpest seen in 16 years. The trend could very well continue as well, with more than 50% of service providers surveyed saying they expect expansion to continue.3
Could the Syria Conflict Possibly Lead to a Market Correction?
As world leaders gather at the G-20 summit in St. Petersburg, it’s evident that the most pressing topic will be how to handle the conflict in Syria. President Obama is seeking action against Syria, but is facing some resistance from other world powers. Great Britain’s parliament voted against it, though France remains committed to supporting US efforts.4
With all of the uncertainty surrounding the strike, there is a possibility the markets could be affected. Are there strategies to handle a stock market correction should one occur? We also talk about what this could mean for the markets in our latest newsletter, “Did the S&P 500 Reach All-Time Highs? Is there a Cause for Concern?"
Have a great weekend,
The Investment Policy Committee
Sources:
2 ABC News
3 Chartered Institute of Purchasing & Supply
