John Hancock: Weekly Market Recap Week Ended May 31st
June 4, 2019
May proved to be no match for this past December in terms of a monthly decline, but the market’s drop from near-record highs at the start of the month was steep nevertheless. The S&P 500 and the Dow both fell nearly 7% in May; the NASDAQ tumbled almost 8%.
The U.S. government’s latest estimate put first-quarter GDP growth at 3.1%, slightly below an earlier estimate. However, it was well ahead of the fourth quarter’s 2.2% figure and a further indication that the economy remains strong for now, despite the recent market slump.
The yield of the U.S. 10-year Treasury bond fell on Friday to around 2.14%, the lowest in nearly two years. The decline caused a deepening of an inversion in the yield curve, with some categories of short-term debt yielding more than long-term debt—a phenomenon that has often preceded economic recessions in the past.
The decline in bond yields is being felt in the housing market, as U.S. mortgage rates fell for the fifth week in a row. The average 30-year mortgage slipped just below 4.00% for the first time since January 2018, according to Freddie Mac.