by Connor Darrell CFA, Assistant Vice President – Head of Investments
Fading fears of a global recession helped push risk assets higher while traditional safe-haven assets such as bonds underperformed. U.S. equity indices achieved new all-time highs as several signs of improvement in global economic conditions eased investors’ concerns. Markets cheered marked improvements in both non-manufacturing and manufacturing PMIs, which help to evaluate the confidence of business leaders. There were also encouraging signs from European consumer data, where retail sales rose 3.1% year-over-year. The reassuring data led to an increase in longer term bond yields and a steepening of the yield curve, resulting in negative returns for the major bond indices.

With Q3 earnings season close to wrapping up, FactSet Research is reporting a blended earnings growth rate of -2.4% year-over-year. With revenues rising 3%, the decline in corporate profits helps to underpin the impacts that rising costs have had on businesses coping with the fallout from the U.S./China trade dispute. Despite the decline, the overall numbers have actually exceeded analyst expectations, and many companies have seen their stock prices rise following earnings releases; yet another sign that things may not be quite as bad as many investors may have thought.