The 5 Most Important Questions for the US Economy in 2019

By Dr. Sonu Varghese via

After surging to new highs over the first three quarters of 2018, equity markets tumbled and posted their worst year in a decade.  The S&P 500 index fell -4.4% (including dividends), finishing the year 14.5% lower than its September high point.  At its lowest level in late December, the index just barely missed a ‘technical bear market’ decline of -20%.  Amidst the chaos, CBOE’s volatility index was up almost 200% on Christmas eve from its level at the beginning of the quarter.

Volatility manifested itself quite violently amongst the sectors making up the S&P 500 as prior trends turned abruptly.  Previously high flying sectors like Technology fell more than -17% over the quarter, while defensive sectors like Utilities rose in rank.

Risk-off sentiment saw investors rushing back to that tried and tested safe asset, US Treasuries.  Yet again, forecasts of the US 10-year Treasury yield topping the 3.0 mark by the end of 2018 (including predictions of 3.50) were confounded.  US 10-year yields did rise, but ended the year at 2.69, just 29 basis points higher than where it began 2018.

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