June Market Recap: Trade Optimism & Fed Rate Outlook Drive Gains

Overview

Optimism on trade paired with indications the Fed will cut rates drove all major asset classes higher.

By changing tune on the direction of rates, the central bank indicated concern about mixed economic data points and the ongoing possibility of the trade war impacting growth. And perhaps a bigger issue may be that the Fed is worried about a prolonged inverted yield curve.

The 10-Year Treasury yield ended the month at an even 2%.

Market Movers in June

The G20 Summit

President Trump and Chinese President Xi met at the G20 summit in Osaka and indicated progress toward a trade agreement, but there was relatively little action. Still, any progress was welcome compared to last month when both sides accused the other of retreating from previously agreed-to points. US tariffs on about $200 billion of goods remain set at 10%, which avoids a potentially impactful move to 25%. Trade will continue to dominate financial headlines in the coming months, and we believe there are balanced chances for either further positive steps or regression.

Antitrust Investigations

At the start of June, the Department of Justice and the Federal Trade Commission announced they would split duties to investigate antitrust issues at Google, Apple, Amazon and Facebook. Tech shares dropped on the news but recovered quickly. Given the widespread popularity of these companies, we don’t see much threat of any meaningful regulation in the near-term. However, the rapid pivot in sentiment against big tech in Washington illustrates that there is a ceiling on how big these companies will be allowed to grow. Those betting on years of rapid growth should take note. These developments illustrate the natural functions that cause sector leadership to rotate and prevent any one part of the market from being “better” for too long.

Read More: What Will the Antitrust Investigations Mean for the Market?

The IPO Market

The IPO market remained hot, with successful listings for Slack, The RealReal, Chewy, and Fiverr, among others. A flood of IPOs can be a concerning sign of market exuberance, but so far newly issued shares don’t represent a concerning increase in supply in our opinion.

Read More: How Does an IPO Work?

New at Personal Capital in June

In June, we introduced Personal Capital Cash™, a high-yield account*. It starts at 2.30% APY**, has no account minimums and is covered up to an aggregated $1.5 million in FDIC insurance***. We also released Savings Planner, an online tool designed to help you plan how much and where to save. Together, they represent another step toward helping you progress toward reaching your financial goals.

Read More: Make Every Penny Count with Personal Capital Cash and Savings Planner