Global Growth Continues Amid Trade War Rhetoric

• The third quarter saw continued economic growth. U.S. equities were up over 7% in the quarter. GDP reached over 4% and earnings and revenue growth were over 25% in the quarter. Tax cuts, improved margins, and a strong consumer contributed to growth. However, trade wars, a strong U.S. dollar, rising rates in the U.S., and geopolitical uncertainty continue to be a cause for concern in other risk markets.
• International equities were up 1.3% in the quarter, however they are still down 1.5% for the year. Developed international has been more resilient than emerging markets, which were down over 1% for the quarter and down nearly 8% for the year. The strong U.S. dollar has affected the space, in particular, those countries with current account deficits. Trade tensions between China and the U.S. have also continued to put a strain on the asset class.
• U.S. high yield continued to be the best performing asset class in fixed income as strong growth and solid underlying fundamentals resulted in slightly tighter spreads over the quarter. U.S. core fixed income posted flat returns on the back of rising inflation expectations. Emerging market debt continued to exhibit volatility as escalating concerns over global trade and an appreciating dollar put pressure on the space.
• The metals and mining sector endured a difficult quarter as U.S. trade policy uncertainty clouded future demand for various commodities. Given that China consumes a large portion of the world’s commodities, investors worry that a lower Chinese growth outlook could have a negative effect on future consumption.

To view the First Quarter Reports, click on the links below:

• 3Q18 Global Positioning Statement™
• 3Q18 Global Equity Review
• 3Q18 Taxable Fixed Income Review
• 3Q18 Tax-Exempt Fixed Income Review
• 3Q18 Real Assets Review
• 3Q18 Private Equity Review