By: Jeff Anderson
|Close||Weekly return||YTD return|
|US Treasury 10yr Yield||2.844%||19.3%%||133%|
Source: Wall St. Journal
No Signs of a Recession in The Labor Market:
All this back and forth about the state of the economy was flipped on its head (again) with Friday’s employment report. 528,000 jobs were added in July, more than 100% more than consensus estimates. There are a lot of shattered crystal balls on Wall Street! The unemployment rate is back to its pre-pandemic lows of 3.5% and we have finally clawed back all those lost jobs. It took 29 months to do so, but it happened.
Source: Wall Street Journal.
So, what should we make of all this conflicting data (two consecutive quarters of negative GDP growth vs a strong labor market, overall positive consumer spending and corporate earnings that are holding up relatively well)? Not a lot really. Equities and fixed income markets tend to have a manic behavior during periods like this. These periods are speedbumps along the road towards your financial goals. Even if you are retired, you have financial goals. They are different then when you were saving towards it, but they are goals, nonetheless. Where we can bridge the gap between economic news and investments is in how we react during these tumultuous times. Missing out on even a few days of good performance can have a detrimental effect on a portfolio. Yes, markets can be unpredictable. But the long-term trend has been up. The S&P 500 Index has finished the year in positive territory roughly 75% of the time since it was created way back in 1926. The table below shows the impact of missing the best market days on your portfolio.
Source: Russell Investments
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