Presented by Mark Gallagher

General Market News
• Rates moved lower last week, with the 10-year Treasury yield reaching 0.58 percent and opening slightly higher on Monday at 0.63 percent. The 30-year opened at 1.25 percent, and the 2-year opened at 0.19 percent. Rates are reacting to the COVID-19 pandemic and have started paying attention to the economic impact it will have this year and into 2021. The Federal Reserve is set to meet next Wednesday, April 29.
• Markets continued their rally last week, as new daily coronavirus cases showed some signs of leveling off at the country level, and there were discussions about a potential path to reopening the U.S. economy. We saw companies that have benefited from the recent environment, such as Amazon, Walmart, and Netflix, reach all-time highs. The former two names helped make consumer discretionary the top-performing sector on the week. This was followed by the health care sector, which benefited from reports of work on a potential vaccine and drug treatment (Remdesivir) being done by companies such as Johnson & Johnson and Gilead Sciences. Technology also performed well, with NVIDIA and Intel among the top contributors in the S&P 500 for the week. The financials sector was the worst performer, with many banks indicating higher-level loan-loss provisions. Other weaker sectors included REITs and materials.
• On Wednesday, March’s retail sales report was released. Sales fell by 8.7 percent during the month, which was worse than economist estimates for an 8 percent decline. This is the worst monthly result on record, easily surpassing the previous record sales decline of 3.9 percent, which we saw in November 2008. Consumer spending accounts for roughly two-thirds of economic activity in the U.S., so this sharp drop in sales is very concerning, although not surprising.
• Wednesday also saw the release of the National Association of Home Builders Housing Market Index for April. This measure of home builder confidence came in worse than expected, falling from 72 in March to 30 in April, against calls for a more modest drop to 55. This is the worst monthly drop for home builder confidence in history, and the index now sits at a seven-year low. Confidence had improved steadily throughout 2019 and the start of 2020, driven by low mortgage rates that spurred prospective buyers into the market. The increase in confidence led to a surge in new home construction, but April’s large decline in confidence is expected to slow new construction.
• We saw a glimpse of this on Thursday, when March’s housings starts and builder permits reports were released. Housing starts fell by 22.3 percent during the month, which was worse than estimates for an 18.7 percent drop. This is the worst monthly decline for starts since 1984. Permits held up a bit better, falling 6.8 percent against expectations for a 10.7 percent fall. This brought the pace of new home construction to its lowest level since July 2019, and April’s results are expected to show additional weakness.
• Finally, we finished the week with Thursday’s release of the initial jobless claims report for the week ending April 11. This report showed mass layoffs continuing well into April, with an additional 5,245,000 Americans filing initial unemployment claims during the week. This is down from 6,615,000 initial claims the week before and better than economist expectations for 5,500,000 initial filers. Despite the slightly better-than-expected result for the week, the fact of the matter is that that more than 22 million jobs were lost in a four-week period, which is unprecedented.

Source: Bloomberg

Source: Morningstar Direct

What to Look Forward To
On Tuesday, March’s existing home sales report will be released. Economists expect to see sales decline by 7.3 percent during the month, due to the headwinds created by efforts to contain the coronavirus. While this result would be disappointing, it would leave the pace of new sales slightly higher than it was in March 2019. Sales of existing homes fell throughout much of 2018 before rebounding impressively throughout much of 2019 and the start of 2020. If estimates hold, the March report would mark the ninth straight month with year-over-year growth in existing home sales. But March is likely to be the last month with year-over-year growth for the foreseeable future, given last year’s strength and the numerous headwinds the sector is facing.

On Thursday, the U.S. initial jobless claims for the week ending April 18 will be released. Economists expect an additional 4.5 million initial claims to have been filed during the week. If this estimate holds, the four-week total of new filers would exceed 23 million. While this figure is quite worrisome, a bit of a silver lining may exist in terms of the types of jobs lost. We will continue to monitor this weekly release until we get a sign that the pace of layoffs and dismissals has returned closer to levels seen before the crisis.

Thursday will also see the release of April’s IHS Markit Flash U.S. Composite Purchasing Managers’ Index reports. These surveys are expected to show a large monthly decline in business confidence for both the manufacturing and service sectors. Manufacturing confidence is anticipated to fall from 48.5 in March to 36 in April, while service sector confidence is set to drop from 39.8 to 31.3. These are diffusion indices, where values below 50 indicate contraction, so these results would be worrisome, especially given March’s weak results. If the estimates hold, the composite index, which combines manufacturer and service sector confidence, would sit at a level that typically indicates a 10 percent contraction to annual gross domestic product. Business sentiment and investing were weak throughout much of 2019 before showing signs of recovery to start the year. Currently, given the understandably weak confidence figures in March and anticipation for continued weakness, indications are for business spending to remain constrained.

March’s new home sales report will be the third major data release on Thursday. New home sales are expected to fall by 15 percent during the month, following a 4.4 percent decline in February. Compared with existing home sales, new home sales are a smaller and more volatile portion of the overall housing market. Accordingly, weakness resulting from the coronavirus crisis is understandable. If the estimates hold, the March report would bring the pace of new home sales to its lowest level since May 2019. In coming months, we can once again expect weakness to continue due to the ongoing measures to combat the coronavirus and the changes to consumer spending resulting from the crisis.

On Friday, March’s preliminary durable goods orders report will be released. Orders are expected to fall by 12 percent during the month, following a better-than-expected 1.2 percent increase in February. Some of this anticipated decline can be attributed to a slowdown in volatile aircraft orders. But another factor may be an expected 5 percent decline in core durable goods orders, which strip out the impact of transportation orders. If the estimates hold, the March numbers would mark the largest single-month decline in core durable goods orders since January 2009. Then, core durable goods orders fell by 10.2 percent month-over-month in the middle of the global financial crisis. Core durable goods orders are often viewed as a proxy for business investment, so a decline would once again be a concern but not a surprise.

Finally, we’ll finish the week with Friday’s release of the second and final reading of the University of Michigan consumer sentiment survey for April. The preliminary report released earlier in the month showed consumer confidence falling from 89.1 in March to 71 in April, which was the largest single-month decline in the survey’s history. Economists expect the final report to show a further decline to 69, as efforts to combat the coronavirus and large-scale layoffs continue to weigh on consumers. Improved confidence typically supports faster spending growth, so further declines would be a bad sign for April’s consumer spending figures. Consumer sentiment will be an important area to monitor as we continue to combat the spread of the coronavirus. A fulfillment to our hope for a swift V-shaped economic recovery will likely hinge on consumers quickly regaining confidence and returning to spending levels seen before the crisis. Ultimately, if consumer confidence remains depressed throughout the year, spending will probably follow suit. Any signs of a rebound in confidence in the coming months would therefore be quite welcome.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg Barclays US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg Barclays US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg Barclays US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.

Authored by the Investment Research team at Commonwealth Financial Network.

© 2020 Commonwealth Financial Network ®

Presented by Mark Gallagher

General Market News
• The 10-year Treasury yield opened at 0.72 percent on Monday, where it spent most of last week. It fell as low as 0.56 percent the week before and rose as high as 1.27 percent in mid-March. It seems to have settled within a small range now, though, waiting out more news. The 2-year opened at 0.221 percent, and the 30-year opened at 1.344 percent. The market seems to be holding out to see what the broader economic impact of COVID-19 will be for the U.S. and the rest of the world, something we should have more information on in the weeks to come. The Federal Reserve (Fed) meets later this month and may provide more clarity.
• Markets rallied last week, as there were signs that growth in new coronavirus cases may be leveling off. In addition, there were discussions of an oil production cut, as well as a potential plan to reopen U.S. businesses. The Fed stepped up on Thursday, pledging to provide an additional $2.3 trillion in loans to support the economy. All of these measures helped suppress some the main economic risks that have been plaguing markets. The Russell 2000 Index led the rally for week, as small-cap companies, which were among the hardest hit in the recent sell-off, received support from the Fed and the Small Business Administration’s Paycheck Protection Program.
• Last week, there was a notable shift in the sectors that outperformed, as many of the top sectors—REITs, materials, and financials—were the ones that had recently taken a beating. Those sectors that outperformed in previous weeks, such as consumer staples, health care, communication services, and technology, lagged for the week.
• On Thursday, the Producer Price Index for March was released. Producer inflation came in above expectations, with prices falling 0.2 percent during the month, against expectations for a larger decline of 0.4 percent. On a year-over-year basis, producer inflation came in at 0.7 percent, down from 1.3 percent in February but above expectations for 0.5 percent annual inflation. The declining inflation was due in large part to lowered gas prices, as the core figure, which strips out energy and food prices, was flat for the month. Inflation remained well constrained in 2019, despite three rate cuts from the Fed during the year.
• Thursday also saw the release of the weekly initial jobless claims report for the week ending April 4. An additional 6.606 million Americans filed for initial unemployment claims during the week, bringing the three-week total to more than 16.5 million. This recent surge in initial jobless claims is unprecedented in U.S. history and indicates that the unemployment rate will continue to climb in April, with a double-digit reading now likely. This will continue to be a closely monitored weekly data release until we see some sort of tapering off in initial jobless claims.
• Finally, we finished the week with Thursday’s release of the preliminary estimate of the University of Michigan consumer sentiment survey for April. This measure of consumer confidence fell by more than expected, from 89.1 in March to 71 in April, against estimates for a drop to 75. This brought the index to its lowest level since 2011 and marks the largest single-month decline in history. This survey included responses between March 25 and April 7, when the pace of layoffs was increasing massively. Consumer confidence is supported by rising equity markets and a healthy job market, so it is not a surprise that consumers reacted to the unprecedented pace of layoffs and the market volatility with sharply lower confidence. Rising confidence, in turn, typically supports additional consumer spending growth, so this sharp decline is a bad sign for March and April’s spending figures.

Source: Bloomberg

Source: Morningstar Direct

What to Look Forward To
On Wednesday, the retail sales report for March will be released. Sales are projected to fall by an eye-catching 6 percent during the month, following a 0.5 percent decline in February. This result would represent the largest single monthly decline in retail sales history, beating the previous record of a 3.9 percent monthly drop set in November 2008. This figure will likely be partly attributable to lower gas prices, but the drawdown in spending is expected to be more widespread. The core retail sales figure, which strips out the impact of volatile auto and gas sales, is set to show a 4.7 percent decline for the month. Consumer spending accounts for roughly two-thirds of economic activity, so a sharp decline would be a negative signal for overall economic growth.

Wednesday will also see the release of March’s industrial production report. Predictions are for a 4.1 percent drop in production during the month, following a better-than-expected 0.6 percent gain in February. This result would be in line with a 4.3 percent monthly decline in production that occurred in September 2008. Much of the expected drop-off should come from a steep decline in manufacturing output. The forecast is for this segment to fall by 3.1 percent, due to weaker global demand related to the coronavirus crisis. Manufacturer confidence and output were volatile throughout much of 2019 due to the escalating U.S.-China trade war. To start 2020, however, we saw signs of growth, which makes these projections all the more disappointing. Given the disruptions to the labor force and falling global demand, a rebound in manufacturing output appears unlikely until we can better control the spread of the coronavirus.

The third major data release on Thursday will be April’s National Association of Home Builders Housing Market Index. This measure of home builder sentiment is set to show a steep fall from 72 in March to 59 in April. This result would bring home builder confidence to its lowest level in more than a year; however, the index would still sit above the low-water mark of 56 set in December 2018. Home builders experienced steadily increasing confidence throughout 2019, as low mortgage rates spurred prospective buyers into the market. This trend led to a surge in new home construction during the year and into 2020, with housing starts reaching their highest monthly level in 13 years in January. If estimates for home builder sentiment hold, the cratering confidence would likely serve as a headwind for future construction.

Speaking of construction, on Thursday, March’s housing starts and building permits reports will be released. Both are expected to show significant declines for the month, with starts and permits slated to fall by 17.5 percent and 10.5 percent, respectively. Although these releases can be volatile on a monthly basis, seeing further weakness in new home construction would not be surprising given the current health crisis. The strong run-up in construction in 2019 and the start of 2020 does help cushion the projected decline a bit. Without it, starts would be at levels last seen in September 2019 if the estimates hold. The housing sector has been an engine for economic growth for some time, but future weakness should be expected.

Finally, we’ll finish the week with Thursday’s release of the U.S. initial jobless claims report for the week ending April 11. Economists are currently estimating that an additional 5 million Americans will have filed new unemployment claims last week. This number would represent a decline from the average of 6 million new filers seen over the previous two weeks. Still, the report would show that roughly 22 million Americans lost their jobs over a four-week period—another indication of the unprecedented situation we now find ourselves in. We’ll continue to monitor this weekly release closely until we get a sign that the pace of layoffs and dismissals has begun to slow.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg Barclays US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg Barclays US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg Barclays US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.

Authored by the Investment Research team at Commonwealth Financial Network.

© 2020 Commonwealth Financial Network ®

Presented by Mark Gallagher

General Market News
• The 10-year Treasury yield opened at 0.61 percent on Monday. The 2-year opened at 0.25 percent, and the 30-year remained elevated, opening at 1.25 percent. The anticipation of the U.S. Treasury issuing a record amount of 30-year debt to pay for the $2 trillion stimulus package is keeping long rates higher. COVID-19’s long-term effect on American lives and the U.S. economy is still yet to be fully understood. We expect to see continued volatility in the weeks to come.
• Global indices sold off last week, as President Trump extended social distancing guidelines through April 30 due to the continued spread of COVID-19. Small-caps in particular were hit the hardest, as shelter-in-place orders and stay-at-home advisories continued to hamper business. On Friday, Bank of America reported that 85,000 customers applied for $22.2 billion in small business loans in the first day of the small business relief program. The technology-heavy Nasdaq Composite and the MSCI Emerging Markets Index both held up relatively well, with Chinese manufacturing ramping back up.
• The top-performing sectors on the week—all of which posted positive gains—were energy, consumer staples, and health care. Energy was supported by news of a potential oil production cut from Saudi Arabia and Russia, following their recent pricing feud. The worst-performing sectors included utilities, financials, and REITs.
• On Tuesday, the Conference Board Consumer Confidence Index for March was released. Consumer confidence fell from an upwardly revised 132.6 in February down to 120 in March, which was better than expectations for a further decline to 110. This brought the index down to its lowest level since July 2017. Consumers were primarily concerned with what the future holds, as the subindex that measures future expectations fell from 108.1 in February down to 88.2 in March. The measure of current conditions had a much shorter fall, dropping from 169.3 in February to 167.7 in March. This surprising strength in the present situation subindex indicates that there is still plenty of room for this index to fall in upcoming months.
• Wednesday saw the release of the Institute for Supply Management (ISM) Manufacturing index for March. This measure of manufacturer confidence beat expectations, falling from 50.1 in February to 49.1 in March, against forecasts for a further fall to 44.5. This is a diffusion index, where values above 50 indicate expansion and values below 50 indicate contraction. This better-than-expected result left the index above the recent 47.8 we saw in December 2019. Despite this, the underlying data was concerning, as the subindex that measures new orders fell from 49.8 to 42.2, suggesting that demand is swiftly drying up. Business confidence will be an important area to monitor going forward, as sharp drops in confidence likely indicate that business investment will remain weak for the foreseeable future.
• On Friday, March’s employment report was released. A staggering 701,000 jobs were lost during the month, which was far more than the forecasted decline of 100,000. This marks the first month with net job loss since 2010, breaking an extraordinary streak of gains. The unemployment rate increased to 4.4 percent, up from 3.5 percent in February. This was a grim report, but it understates the true damage done to the economy during the month, as this report only covered the first two weeks of March and the pace of layoffs increased dramatically during the second half of the month. April’s employment report is expected to show significantly more job losses and a climbing unemployment rate.
• Finally, we finished the week with Friday’s release of the ISM Nonmanufacturing index for March. This measure of service sector confidence fell from 57.3 in February to 52.5 in March, which was much better than the expected fall to 43. As is the case with the manufacturing index, this is a diffusion index, where values above 50 indicate expansion, so this better than expected result revealed the service sector’s surprising resilience during the month. Despite the better-than-expected results for manufacturing and nonmanufacturing confidence, future surveys are expected to show significantly lower confidence levels as businesses adapt to the new economic reality.

Source: Bloomberg

Source: Morningstar Direct

What to Look Forward To
Wednesday will see the release of the Federal Open Market Committee (FOMC) minutes from the Federal Reserve’s (Fed’s) emergency meetings on March 3 and March 15. The minutes will provide a look into the Fed’s rationale for cutting the federal funds rate to effectively zero through two surprise rate cuts earlier in the month. The commentary is expected to be slightly dated, given the rapidly escalating situation and subsequent Fed actions to support the markets. The Fed announced a suite of quantitative easing measures in the weeks following its March 15 meeting. It will be interesting to see if alternative measures were discussed at the March meetings that haven’t yet been used. Based on the scope and timing of its actions in March, the Fed is clearly committed to supporting the financial system though this crisis. The FOMC minutes may give us a hint as to what additional stimulus by the Fed may look like.

On Thursday, the Producer Price Index for March will be released. Economists expect to see headline inflation decline by 0.3 percent during the month, largely due to lowered gas prices. This result would bring year-over-year headline producer inflation down to 0.5 percent, marking its lowest level since 2016. Core producer prices, which strip out the impact of volatile energy and gas prices, are expected to remain flat for the month. This result would translate to modest 1.2 percent year-over-year core producer inflation. Producer inflation fell throughout much of 2019. Low producer price pressure is expected to continue in the short term, due to the collapse in global demand during the current crisis.

Thursday will also see the release of the weekly U.S. initial jobless claims report for the week ending April 4. Economists expect 5 million more Americans to file initial unemployment claims for the week, following two weeks during which roughly 10 million Americans filed new claims. The past two reports clearly showed the economic headwinds created by the measures to combat the spread of the coronavirus. The recent surge in initial jobless claims is unprecedented in U.S. history. This weekly report will continue to be a closely monitored gauge of the job market, given its relatively up-to-date issuance.

The third major release on Thursday will be the preliminary estimate of the University of Michigan consumer sentiment survey for April. Economists are calling for a steep drop from 89.1 in March to 80 in April. This result would bring the index down to its lowest level since 2013, as consumers are coming to grips with the new economic reality in a country largely locked down. Historically, a strong jobs market and appreciating stock markets tend to support higher consumer confidence levels. So, given the economic climate, there is little hope for an immediate turnaround. High confidence levels typically support additional spending growth, so a decline would bode poorly for April’s consumer spending figures.

Finally, we’ll finish the week with Friday’s release of the Consumer Price Index for March. As was the case with producer prices, economists expect to see a 0.3 percent decline in headline consumer prices, driven by falling gas prices. Core consumer inflation, which strips out energy and food prices, is set to increase by a modest 0.1 percent during the month. On a year-over-year basis, headline consumer inflation is forecast to increase by 1.6 percent, while core prices should increase by 2.3 percent. Inflation remained well constrained in 2019, despite three rate cuts from the Fed during the year. Given the massive disruption to the jobs market over the past month and the Fed’s stated desire to let inflation run above its 2 percent target if necessary, the Fed would be unlikely to raise rates in the short term even if inflation accelerates.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg Barclays US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg Barclays US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg Barclays US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.

Authored by the Investment Research team at Commonwealth Financial Network.

© 2020 Commonwealth Financial Network ®