Every year investors get put through the ringer of some kind of headline driven market movement, but this year it feels like we’re on a ship about to enter the Bermuda triangle or something.
Aaron mentioned some ulterior motives concerning the trade war currency manipulation accusations last week, so this week I want to touch on some hard facts that definitely have caught our attention.
First, gold has awaken. The price of gold has shot up to the highest point since 2013 at over $1500 per ounce. This is interesting as many theorists have been blaming China for controlling gold prices for years. Is it coincidence that this rise has come as China let go of their currency value? Or is this jump in precious metals a sign of caution being taken in global markets.
Second, rates follow suit. Last week the U.S. 10 year treasury slid to 1.69% yield from it’s previous 2% spot. The Federal reserve did cut rates, but remember, the rate they control is the bank borrowing rate, not the treasury rate. Last year when we were raising rates the 10 year yield did go up, but not in step with any Fed rate moves. Last week’s slide could be seen by some as the bond market agreeing with lower growth and inflation outlooks in the coming 10 years.
Third, it’s that time of year. Q3 has historically been a rocky one for equity investors, with the worst historical average returns of the calendar year.
With these three factors lining up we’re taking a bit of a gulp sailing into the fog of September and October and preparing for whatever comes. This is definitely not a time for funny business, investors would be wise to batten down the hatches, but keep a weather eye for opportunities that could be uncovered.