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.
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.
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.
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.
*Personal Capital Cash is offered through Personal Capital Services Corporation (Personal Capital), which is not a bank. To participate in the program, you must open an account at UMB Bank, n.a., Member FDIC, through which your funds will be placed in accounts at participating program banks. The advertised interest rates are paid by participating program banks, not by UMB. Your funds will be FDIC insured up to applicable limits while in transit through UMB Bank. Personal Capital receives a fee from each Program Bank in connection with the Program that is based on the aggregate daily closing balance of deposits held in Program Accounts by such Program Bank. The fee may vary from Program Bank to Program Bank and will generally increase as the aggregate amount of funds held in Program Accounts with the Program Bank increases. See additional disclosures here.
**The Personal Capital Cash Annual Percentage Yield (APY) as of June 11, 2019 is 2.30% APY 2.274% interest rate. The calculation for APY is rounded to the nearest basis point. For Personal Capital advisory clients, the APY is 2.35% (2.323% interest rate). Both the interest rate and APY are variable and subject to change at our discretion at any time without notice.
***FDIC insurance up to $250,000 (including principal & interest) per depositor per program bank. The cash balance you place through the program is swept to one or more program banks where it earns a variable rate of interest and is eligible for FDIC insurance. If the number of program banks changes, the aggregate amount of available FDIC insurance could be higher or lower. If you have deposits at a program bank, you should consider electing not to use that bank by following the opt out instructions we provide. If you do so, the aggregate amount of FDIC insurance available to you will be lower. If you do not do so, your existing deposits and deposits through Personal Capital Cash at that program bank will be combined for the purposes of FDIC coverage, which could result in some of your funds at that program bank being uninsured.For more information on FDIC insurance coverage, please visit www.FDIC.gov. Customers are responsible for monitoring their total assets at each of the program banks to determine the extent of available FDIC insurance coverage in accordance with FDIC rules. Funds you place through Personal Capital Cash are not covered by SIPC.
The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.
Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.