Citi Personal Wealth Management

An Anxious August

Monthly Market Snapshot: August 2019

Highlights

Stocks fell across most regions in August as investors grew increasingly anxious over slowing global growth and the ongoing U.S. – China trade war. In the United States, the S&P 500 was at one point 4.7% lower in the month, but it rallied back to close the month at just 1.8% lower (year-to-date gains are still 16.7%). In Europe, worries about Germany’s economy and concerns about the upcoming October 31 Brexit deadline led to a 2.2% decline in equities. Emerging markets continued to underperform – falling by 5.1%.

An inverted yield curve (when the two-year U.S. Treasury yield is higher than the 10-year U.S. Treasury yield) is one of the best indicators of an oncoming U.S. recession. However, the timing of the next recession can vary widely. While the odds of a recession are rising, one does not yet appear imminent. There may still be time for policymakers to make decisions that can help to avoid (or delay) a U.S. recession.

Citi’s Private Bank’s Global Investment Committee (GIC) maintains a slight underweight on global stocks. After a sharp drop in international bond yields, the GIC decided to reduce its global fixed income overweight of 1.5% to neutral. Those proceeds were used to initiate a 1.5% overweight on gold.