John Hancock: Weekly Market Recap Week Ended August 23rd

Rate outlook

With the U.S. Federal Reserve widely expected to cut interest rates again at its next policy meeting in mid-September, Chairman Jerome Powell on Friday didn’t commit to any sharp rate reductions or other aggressive moves to stimulate economic growth. In an address before a global monetary policy conference, Powell said the Fed “will act as appropriate to sustain the expansion.”

Yield push-pull

U.S. Treasury bond yields climbed early in the week, with the 10-year yield rising above 1.60%. But Friday produced another bond price rally, sending the yield back down to 1.52%. In Germany, the yield of the government’s 30-year bond was negative for the first time ever.

Buyback slump

The surge in buyback activity in recent years by companies repurchasing shares of their stocks appears to be waning. Buybacks in this year’s second quarter fell relative to this year’s first quarter and to the same period a year earlier, according to S&P Dow Jones Indices. It was the second such quarterly decline in a row.

Manufacturing downturn

The latest worrisome indicators about global economic growth came on Thursday, when a monthly index of factory activity fell in the United States, Japan, Germany, and the eurozone. The U.S. decline marked the nation’s first monthly manufacturing contraction since 2009, according to IHS Markit.