A Note From The Team
The S&P 500 ended the third quarter with a gain of 3.3%. It was the best quarter of the year, and leaves the index higher by 6.1%. It was a quarter that began with expectations of accelerating growth after a sluggish first half, accompanied by another step toward policy normalization by the Federal Reserve. As the fourth quarter gets underway, the pace of economic growth remains the central question.
Beyond the question of economic growth, the fourth quarter will not be without its other challenges. In Europe, investors are waiting for the European Central Bank (ECB) to reveal its plans for policy in the New Year. And the political climate remains contentious, especially in the lead up to Italy’s constitutional referendum in December. The Bank of Japan has revealed its new strategy of manipulating the yield curve, but its ultimate effectiveness remains to be seen, and the strong yen remains a headwind to growth.
In the U.S., the Federal Reserve seems poised to raise interest rates in December if the data gives it enough cover. And, of course, there is the presidential election, which remains close in the polls with just five weeks to go.
More next month…
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