Momentum seems to be building in the U.S. economy. Despite recent sluggishness in Personal Consumption Expenditures, consumer confidence remains strong and reached a fifteen-year high in April. The March jobs report showcased a 4.5% rate for unemployment, the lowest since May 2007 with 98,000 jobs added to the workforce. The lowering of the unemployment rate suggests a strengthening labor force, closing in on “full-employment”. New home sales were up 5.8%, the strongest increase since July. Housing market trends remain favorable and analysts are expecting an increase in the number of first-time homebuyers. Although the number of available homes is waning, real estate experts appear confident construction will rise with demand over the next quarter. Oil prices surged in the beginning of April, recovering from March declines, before falling again in the final days of the month. Market prices have shown little reaction to the recent idleness of the Trump administration’s pursuit to carry out campaign promises. Recent swells of geopolitical wrangling have been the main culprit behind increasing market volatility abroad. The tension between globalism and nationalism will likely affect investment decisions, both domestically and globally, in the months ahead. Global stocks saw a sharp rally after the French election, showing heightened support for Emmanuel Macron’s globalist agenda that supports open borders and international trade.
Tepid stock market returns in the first three weeks of the month were followed by a strong rally in the final week with the DJIA finishing at 20,952. The Nasdaq hit an all-time high of nearly 6,100, indicative of strong investor confidence in the technology sector. After strong equity market returns following the election, equity performance consolidated in March and most of April as investors digested the ability of the Trump administration to enact regulatory reforms. Due to elevated U.S. equity prices, many investors appear to be looking outside of domestic stocks and increasing investment in European and emerging markets. International markets were also supported by pro-euro sentiment as voters prepare for the final round of France’s presidential election.
April bond market returns were strong. The 10-year Treasury bond rallied to finish the month yielding 2.28%. Government bond markets were supported by uncertainty surrounding President Trump’s tax, health care, and infrastructure plans while the corporate market was generally aided by favorable company earnings reports. Going forward, Investors are likely to continue their wait-and-see approach, as they contemplate fiscal and monetary policy actions against a backdrop of geopolitical concerns. The Trump Administration is expected to provide further detail on its health care and tax plans in the coming weeks. While the Fed held rates steady at its most recent meeting, plans to proceed with gradual rate increases this year remain intact.