The Fed raised its benchmark rate another 0.25% and guided that one additional rate hike could occur this year and three next year. This puts the current federal funds rate range at 2-2.25% – matching inflation for the first time in ten years. Little progress was made on trade negotiations with Canada or China amid the backdrop of a packed schedule of meetings for President Trump during the United Nations General Assembly this week. We continued to see protectionist behavior across the globe as Italy proposed a budget that is out of line with the European Union guidance. Finally, after a tumultuous week, the Kavanaugh nomination was approved by the Senate committee contingent on a week delay for an FBI investigation.
US stocks pulled back last week after a very strong quarter. The S&P 500 index ended the third quarter up nearly 7%. Corporate angst was anew this week as the SEC announced that it would sue Telsa and ask for the removal of Elon Musk due to his misleading tweet about secured funding. Additionally, Facebook disclosed at the end of the week that hackers breached the accounts of 50 million of its users. International stocks also ended the quarter on a down note with both developed and emerging markets flat to down in the third quarter of the year. Bond rebounded as the Fed rate hike was widely anticipated and priced in over the last few weeks.
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