Presented by Mark Gallagher

More treats than tricks for markets in October
October was another positive month for markets. Diminishing risks helped drive equity markets near all-time highs. The S&P 500 gained 2.17 percent in October and finished the month at a new record high. The Dow Jones Industrial Average grew by 0.59 percent in October, while the Nasdaq Composite led the way with a 3.71 percent return.

These positive results were supported by better-than-expected earnings during the month. According to Bloomberg Intelligence, the anticipated third-quarter earnings decline for the S&P 500 is 2.1 percent, with 60 percent of companies reporting as of October 31. This is up from estimates of a 3.2 percent decline at the end of September. Further, improvements are widespread, with 8 of the 11 sectors performing better than expected. Fundamentals drive long-term market performance, so this improving third-quarter earnings picture is encouraging. Technicals were also supportive for U.S. markets. All three major indices spent the month above their respective 200-day moving averages, despite some early volatility.

Results were also strong internationally, as receding risk of a “no deal” Brexit buoyed markets. The MSCI EAFE Index increased by a strong 3.59 percent during the month. Emerging markets fared even better, as the MSCI Emerging Markets index climbed 4.23 percent. Technical factors were mixed, however. The MSCI EAFE spent the beginning of October below its 200-day moving average before breaking above the trend line for the rest of the month. Emerging markets took longer to break above the trend but managed to finish the month above this important technical level for the first time since July.

Even fixed income had a solid month, as the Federal Reserve (Fed) cut the federal funds rate by 25 basis points at its October meeting. This marks the third straight meeting where the Fed has cut interest rates, as concerns surrounding lackluster job growth and slowing global trade continue to weigh on board members’ minds. Interest rates rose slightly on the long end of the curve. The 10-year Treasury yield started the month at 1.65 percent and ended at 1.69 percent. The Bloomberg Barclays U.S. Aggregate Bond Index increased by 0.30 percent during the month, and the Bloomberg Barclays U.S. Corporate High Yield Index gained 0.28 percent.

Economic data points to slower growth
The positive returns we saw in October came despite recent data releases that painted a picture of slower overall growth. Annualized third-quarter gross domestic product growth came in at 1.9 percent. This result was down from the 2 percent growth seen in the second quarter and the 3.1 percent growth seen in the first quarter. While slowing overall growth is disappointing, economists had forecast a larger drop to 1.6 percent, so there is some reason for optimism here. This result was driven by stronger-than-expected consumer spending, which offset a slowdown in government spending and business investment.

Consumer spending will likely be the major driver of economic growth in the fourth quarter, as business confidence and spending continue to disappoint. Manufacturer confidence has declined sharply throughout the year, hitting a 10-year low in September. We also saw a decline in the nonmanufacturing sector, which accounts for the lion’s share of economic output. After rebounding in August, the Institute for Supply Management (ISM) Nonmanufacturing index fell to 52.6 in September. The ISM composite index, which aggregates the manufacturing and nonmanufacturing indices, has fallen sharply since reaching a high point in September 2018, as uncertainty from trade wars and various political developments have weighed on business-owner confidence.

Figure 1. ISM Composite Index, 2009–Present

With business confidence declining, it’s no surprise that spending was lackluster as well. Durable goods orders fell by 1.1 percent in September, against expectations for a more moderate decline of 0.7 percent. Industrial production fell 0.4 percent, and manufacturing output fell 0.5 percent. The General Motors strike may be to blame for some of this decline. But the overall trend points toward continued weakness in business confidence and spending for the immediate future.

Consumer confidence rebounds as spending continues
With markets near or at all-time highs and the unemployment rate near a 50-year low, it is not surprising consumer confidence rebounded in October. The University of Michigan consumer sentiment index increased from 93.2 in September to 95.5 in October. Overall, things are going pretty well for consumers, and higher confidence levels should help drive continued spending growth.

In fact, consumer spending increased by 0.2 percent in September, marking the seventh straight month of growth. This result was supported by a 0.3 percent increase in personal income, which has grown in each of the past 12 months. Solid income growth indicates that the personal spending growth we have experienced this year is sustainable.

The housing sector, likewise, has shown positive momentum following a weak start to the year. Existing home sales fell slightly in September. On a year-over-year basis, however, they rose by a healthy 3.9 percent. We have seen year-over-year growth in housing sales for the past 3 months, following 16 straight months of year-over-year declines. The continued growth in housing is encouraging given the effect it can have on other sectors of the economy. And while high consumer confidence and strong balance sheets are certainly factors in this housing turnaround, the Fed deserves some credit too. Mortgage rates have dropped near two-year lows, as the central bank continues to cut rates and support the ongoing economic expansion.

Political risks shift in October
We entered October with concerns about the escalating trade war between the U.S. and China, as well as the risk of a “no-deal” Brexit. Both of these risks receded during the month, however. Plans for a preliminary U.S.-China trade deal are now on the table, and another extension of the Brexit deadline was announced, this time to January 31, 2020. Markets reacted favorably to these receding risks, but new concerns have emerged to take their place.

Domestically, the impeachment inquiry highlights the very real risk impeachment presents to markets. With public hearings set to begin this month, growing uncertainty may cause volatility. Earlier in the month, a surprise withdrawal of U.S. troops from portions of Syria also seized headlines. Markets quickly shrugged off this development, however.

Internationally, new risks have emerged as well. The British elections are now set for mid-December, as the U.K. and the European Union continue to hammer out a Brexit deal. And if trade war tensions ratchet back up or the protests in Hong Kong increase in intensity, we may see additional market volatility.

Short-term risks remain, but fundamentals are solid
Despite politically driven uncertainty, economic fundamentals remain solid in the U.S. While growth appears to be slowing from earlier in the year, slower growth is still growth. Rebounding consumer confidence and continued strong consumer spending indicate the economy is in a better place than the headlines suggest. If business confidence and spending can follow suit, the economy would be poised for accelerated growth.

There are still very real risks out there, however—the ongoing impeachment inquiry in particular. While short-term volatility may be likely given the political risks, the strong fundamentals should continue to support markets. As always, a well-diversified portfolio that matches investors’ goals can provide the best path forward in these uncertain times.

All information according to Bloomberg, unless stated otherwise.

Disclosure: Certain sections of this commentary contain forward-looking statements 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. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. 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 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. It excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Bloomberg Barclays Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg Barclays government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities. The Bloomberg Barclays U.S. Corporate High Yield Index covers the USD-denominated, non-investment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below.

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 Brad McMillan, CFA®, CAIA, MAI, managing principal, chief investment officer, and Sam Millette, senior investment research analyst, at Commonwealth Financial Network®.

© 2019 Commonwealth Financial Network ®

Presented by Mark Gallagher

General Market News
• Rates moved higher late last week after a two-week period of flatness. The 10-year Treasury yield rates came in at the highest level we’ve seen in the past 30 days. The last time rates hit this level (on September 17), they began a three-week fall back to 1.50 percent. On Monday, the 10-year opened at 1.83 percent, the 30-year opened at 2.32 percent, and the 2-year opened at 1.64 percent.
• Global equity markets reached higher last week, as investors moved toward risk assets following potential easing in trade tensions. The cyclical sectors were among the best performers, with energy, technology, industrials, and financials all among the top contributors. Despite a strong week for cyclicals, not all of the stocks in these sectors followed that trend.
• In a busy week of earnings, Amazon lagged due to lower-than-expected fourth-quarter guidance and the cost to build out one-day Prime shipping. Caterpillar missed earnings on a reduction in dealer inventory. Boeing continued to feel pressure from its 737 MAX issues. Despite the misses by these larger names, the blended quarterly growth rate currently sits at –3.7 percent, with roughly 40 percent of the S&P 500 reporting earnings so far. This result is higher than the expected –4 percent growth rate. REITs, consumer discretionary, and communication services were among the worst performers of the week.
• On Tuesday, September’s existing home sales report was released. Existing home sales fell by 2.2 percent in September, which was worse than the 0.7 percent decline that was expected. Despite the month-over-month drop, this result still represents solid 3.9 percent growth on a year-over-year basis, and it marks the third straight month of year-over-year growth in existing home sales.
• On Thursday, September’s durable goods orders report came in. Durable goods orders fell by 1.1 percent during the month, against expectations for a 0.7 percent drop. This decline was partially attributable to the ongoing General Motors (GM) strike. Core orders, which exclude transportation, fell by a more modest 0.3 percent during the month, indicating that core business investment tailed off to end the quarter.
• Also on Thursday, September’s new home sales were released. Similar to what we saw with existing homes, new home sales declined by 0.7 percent during the month; however, this result was better than the 1.6 percent drop that was expected. New home sales are up 15.5 percent since this time last year, so the small monthly decline in this volatile portion of monthly home sales is nothing to worry about.
• Finally, we finished the week with the second and final reading of the University of Michigan consumer sentiment survey for October. Confidence fell during the month, from 96 at first reading to 95.5 at month-end. Although this midmonth decline is disappointing, it still represents a solid rebound from August’s reading of 89.8, which was nearly a three-year low.

Source: Bloomberg

Source: Morningstar Direct

What to Look Forward To
On Wednesday, we’ll get the first estimate of third-quarter gross domestic product (GDP) growth. Economists expect to see a 1.6 percent annualized growth rate for the quarter, which would be down from the 2 percent growth in the second quarter and 3.1 percent in the first quarter. This projection is largely based on declines in both business and government spending compared with earlier in the year. Net trade is also expected to be a drag once again, as the slowdown in global trade continues to negatively affect domestic growth here in the U.S.

The Federal Open Market Committee is meeting this week and will release its rate decision on Wednesday. Economists and market participants widely expect the Federal Reserve (Fed) to cut the federal funds rate upper limit by 25 basis points, from 2 percent to 1.75 percent. The Fed last cut the federal funds rate by 25 basis points at its September meeting. Since then, notable declines in service sector confidence and a lackluster September jobs report have contributed to concerns for the economy. The Fed continues to be supportive of the ongoing economic expansion, so further rate cuts are not out of the question.

Thursday will see the release of September’s personal income and personal spending reports. Both are set to show solid 0.3 percent growth. These results would mark the 7th straight month of spending growth. The growth rate slowed during the third quarter, however, which likely contributed to the expected slowdown in overall GDP growth. Income growth has been consistent as well. The forecasted result would mark the 12th straight month of income growth following a flat result in September 2018.

The October employment report scheduled for Friday is set to show that an additional 90,000 new jobs were added during the month. This number is down from 136,000 new jobs reported in September. It’s also down markedly from 2018 growth levels that averaged more than 200,000 jobs per month. There may also be downside risk due to the GM strike. If so, this risk factor would be a onetime event that would likely be resolved the following month, as the strike concluded toward the end of October.

Finally, we will finish out the week with Friday’s release of the Institute for Supply Management Manufacturing index for October. Manufacturer confidence is expected to increase slightly from 47.1 in September to 49 in October. This is a diffusion index, where values below 50 indicate contraction. So, while the anticipated increase would be welcome, it would still leave the manufacturing sector of the economy in a recessionary state. This result would mark the third straight month in which manufacturer confidence came in below 50. Accordingly, any rebound from September’s 10-year low would be 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.

© 2019 Commonwealth Financial Network ®

Presented by Mark Gallagher

General Market News
• After two weeks of volatility, rates were relatively flat last week. The 10-year Treasury yield opened at 1.77 percent on Monday, and the 30-year and the 2-year opened at 2.27 percent and 1.59 percent, respectively.
• The S&P 500 and Nasdaq Composite indices both moved higher last week, while the Dow Jones Industrial Average ticked down slightly. The best-performing sectors were health care, REITs, and financial services. Health care moved higher on a strong beat from managed care provider UnitedHealth. The worst-performing sectors were energy, technology, and consumer staples, with oil (West Texas Intermediate) dropping by 1.7 percent for the week.
• One focus of the past week was the bank earnings of JPMorgan Chase, Bank of America, and Citigroup. Despite pressure on net-interest income, all three banks beat expectations, as fee income helped offset weakness in income on deposits.
• On Wednesday, September’s retail sales report was released. Headline sales disappointed, falling 0.3 percent against expectations for a 0.3 percent gain. Part of this decline can be attributed to falling gas prices. But even the core retail sales figure, which strips out the impact of gasoline and vehicle prices, disappointed by remaining flat for the month.
• On Thursday, September’s building permits and housing starts were released. Permits fell by 2.7 percent against expectations for a 5.3 percent drop. Housing starts fell by 9.4 percent during the month, against expectations for a 3.2 percent decline. Despite the decline in September, housing starts remain near post-recession highs.

Source: Bloomberg

Source: Morningstar Direct

What to Look Forward To
On Tuesday, September’s existing home sales report is set to show a modest 0.5 percent decline for the month. Despite the anticipated decline in monthly sales, however, existing home sales are expected to show strong year-over-year growth. Such a result would mark the third straight month of year-over-year growth in existing home sales. This trend is encouraging given the weakness we saw in 2018 and the beginning of this year.

On Thursday, September’s durable goods orders report will be released. Economists expect orders to decline by 0.6 percent during the month, believing that uncertainty regarding trade will slow business investment. As forecasted for the industrial production figures, the General Motors strike is likely to play a part in the predicted slowdown. Core durable goods orders, which strip out the impact of volatile transportation orders, are expected to decline by 0.3 percent.

Also on Thursday, September’s new home sales are scheduled to be released. As with sales of existing homes, new home sales are expected to show a modest 0.4 percent monthly decline, with strong year-over-year growth. Compared with existing home sales, new home sales represent a smaller and more volatile portion of the market. If new home sales decline, the broader housing market is unlikely to be affected.

Finally, we’ll finish the week with the second and final reading of the University of Michigan consumer confidence survey for October. The index is not expected to change from the preliminary reading of 96 earlier this month. If confidence remains unchanged from the start of October, this result would represent a healthy recovery from the drop to 89.8 that we saw in August and would mark the second straight month of increasing confidence. Given the slowdown we saw in September’s retail sales, continued improvements to consumer confidence would go a long way to calm concerns about a potential slowdown in the fourth quarter.

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.

© 2019 Commonwealth Financial Network ®

Presented by Mark Gallagher

General Market News
• Volatility continues to be the main story in rates, as the 10-year Treasury opened last week at 1.5 percent and closed the week at 1.76 percent. The 30-year Treasury was back below 2 percent briefly but closed the week at 2.24 percent. The 2-year Treasury went from 1.35 percent to 1.59 percent. The Treasury market will be closed today in recognition of the holiday, but we should continue to expect volatility in the rates markets going forward.
• Global equities were up across the board as the U.S. and China agreed to a phase-one trade deal. Additional global tensions eased with positive news regarding a potential Brexit deal. The news came as British Prime Minister Boris Johnson offered concessions to Ireland during his discussion with Irish Prime Minister Leo Varadkar.
• The risk-on trade was on for investors as global trade tensions eased. The result was a rally in more cyclical sectors such as industrials, technology, energy, and consumer discretionary. Those defensive sectors (i.e., utilities, consumer staples, REITs) that had been leading in the prior three weeks lagged. Potential trade headwinds still linger via future U.S.-China trade discussions, Brexit, U.S.-EU trade deals, and the United States-Mexico-Canada Agreement, however.
• On Tuesday, the September Producer Price Index was released. Producer prices fell by 0.3 percent during the month, which caused year-over-year producer inflation to fall to 1.4 percent.
• Thursday saw the release of the Consumer Price Index. Consumer prices were flat during the month, against expectations for a modest 0.1 percent increase. Year-over-year consumer inflation fell to 1.7 percent. Both consumer and producer inflation now sit comfortably below the Federal Reserve’s stated 2 percent inflation target, which could help justify further rate cuts during the fourth quarter.
• On Friday, the University of Michigan consumer sentiment survey was released. Consumer confidence rose by much more than expected, from 93.2 in September to 96 in October, against expectations for a modest decrease to 92. This was a very welcome result that helped calm fears of weakening consumer sentiment and spending as we kick off the fourth quarter.

Source: Bloomberg

Source: Morningstar Direct

What to Look Forward To
On Wednesday, September’s retail sales report is set to be released. Economists expect to see 0.3 percent growth in headline sales, which would mark the seventh straight month of sales growth. Core retail sales, which strip out volatile auto and gas prices, are also expected to show 0.3 percent growth. Given the improved consumer confidence in September, it would not be surprising to see another strong retail sales result.

Wednesday will also see the release of the National Association of Home Builders Housing Market Index. This measure of home builder confidence is expected to remain flat at 68 in October, after rising to an 11-month high in September. Low interest rates and high buyer demand are expected to help bolster confidence. On Thursday, September’s building permits and housing starts are set to be released. Both are expected to fall following a surge in August.

Also on Thursday, September’s industrial production report is set to be released. Economists expect production to decline by 0.1 percent, driven by a 0.3 percent decline in manufacturing output. Manufacturing confidence fell in September and spent the second straight month in contradictory territory. August saw a 0.6 percent jump in industrial production, but trade war escalations and the start of the General Motors strike in September are likely to weigh on production.

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.

© 2019 Commonwealth Financial Network ®