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Breaking Down the November Jobs Report and Volatility in Global Markets

By Ryan Lange - CFA, CAIA, Senior Investment Strategist

After a couple years of strong equity returns with limited volatility, investors are being reminded of the risk of investing in the global stock markets. The global equity markets have moved lower since the end of the third quarter with volatility moving back up to normal levels.

There have been four key narratives impacting the equity markets over the past couple of months: 

  1. The first area of focus was the midterm election that passed in early November with limited surprises.

  2. A large number of companies reported quarterly earnings in late October through early November. Overall, results were strong with help from the lower corporate tax rate this year. However, an increasing number of company management teams are providing a cautious outlook for the coming quarters.

  3. Investors have been increasingly worried about the path of interest rate increases from the Federal Reserve. If interest rates are increased to levels that are too high, it would likely push the economy into a recession faster. This week we saw the first inversion of the yield curve. That happens when short-term interest rates move higher than longer-term interest rates. As of today, the 3-year U.S. Treasury rate (2.76%) is higher than the 5-year U.S. Treasury rate (2.74%). The last time this happened was late 2005.

  4. Global trade concerns have also increased over the past couple of months. After multiple rounds of tariffs were added to various imported goods this year, many investors were hopeful that the trade disputes would be resolved. The most recent move of a 10% tariff on $200 billion of goods from China is scheduled to increase to 25% in January. In addition, there are talks of adding tariffs on another $250 billion in goods from China.

The global economy continues to be strong in this long economic expansion following the financial crisis. We saw another strong monthly employment report that showed 155,000 new jobs in the month of November and 3.1% year-over-year wage growth. The 155,000 new jobs in November brings the total for the year to 2.1 million. After nine years of strong gains in employment, there is the risk of running out of new workers to enter the workforce. This is highlighted in the low 3.7% unemployment rate. We would expect the employment gains to continue to slow down as we go forward.

There continues to be opportunity in both the equity and fixed income markets. The lower equity prices have brought valuations back down to attractive levels. Also, the increase in interest rates makes the fixed income market attractive again. Keeping a focus on the long-term will always remain important as these short-term moves can be a lot of noise. Make sure your investment portfolio is structured in a way to meet your investment goals without taking unintended risks. Our wealth advisors can help guide you through this process.

To reach a member of our Wealth Management team, please visit our website at


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