Talking Points of the Week for Financial Advisors (2/3)
February 3rd, 2020
- Markets largely sold off last week as fears that the coronavirus outbreak could slow global growth. China reports that the number of cases has topped 11,700. The US and other countries have restricted travel to China for multiple weeks as an attempt to mitigate the virus from spreading globally.
- Fourth-quarter GDP rose at a 2.1% annualized rate in the first print released this week. This was slightly higher than consensus expectations (2.0%). This simultaneously continues the longest GDP expansion in US history and also marks the slowest growth the US has seen since 2016. The underlying data was a bit mixed with exports and the consumer being the largest contributors to growth. However, some consumer data was lighter than expected, and inventories being uncharacteristically weak for the holiday season.
- As expected, the Fed maintained its target rate steady, further cementing its policy of maintaining a holding pattern until conditions and underlying data support a change in policy. Following the announcement, interest rate futures signaled a sharp increase (roughly 18% vs. about 6% before this meeting) in probabilities for a cut in the next Fed meeting (March 18).
- Friday, January 31st marked the formal exit of Britain from the EU, a moment that has been the subject of great debate since the 2016 referendum vote. British negotiators are now in a transition period where new trade agreements will be designated with the EU as well as other nations. Prime Minister Boris Johnson of the U.K. has stated that the new trade agreements will be completed by the end of 2020.
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