Despite an almost 10% stock market selloff in late September, financial markets were strong in the third quarter. The S&P 500 was up over 8% for the quarter, taking its year-to-date performance to a positive 4%. Due primarily to unprecedented Federal Reserve actions, interest rates remain at historically low levels with the 2 year Treasury yielding only 13 bps (.13%) and the 10 year Treasury yielding 70-80 bps.
Many eyes are on the U.S. election which is taking place against a historic backdrop of a pandemic, recession and domestic social unrest. Uncertainty on these issues creates volatility and we expect even more volatility through the end of the year. Through it all, investors have remained generally bullish on the long-term prospects for the U.S. and world economies. Historical data does not provide any meaningful correlations between Republican or Democratic presidents and stock market returns…except that markets have continued to grind higher over time regardless of which party was in power.
We remain confident in our investment strategy, which is to build diversified portfolios designed to meet the long-term goals of our clients. We are watching closely but refuse to overreact to the news cycle. Please let us know if you have questions or if there is anything we can do for you. We appreciate your support.
Matt and Andrew