Market’s Bounce Back Affirms Fundamentals

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U.S. manufacturing and industrial production reached all time highs before pulling back amid the global slowdown.

The markets bounce back from this week’s selloff is an affirmation of strong underlying fundamentals and a solid economic backdrop. The consumer and manufacturing are two big drivers of the U.S. economy. Consumer spending has been steadily moving up (although maybe not as fast as some would like). The consumer is the game changer accounting for 70% of the U.S. economy and has undoubtedly been doing most of the heavy lifting since the recession but in the past year manufacturing has started to up its contribution. The 1% rise in industrial production in April was the third straight month of increases and the best jump in three years. This bodes well for second quarter GDP growth. However, bond yields are reserving judgement and the 10 year UST yield remains below 2.3%. Please follow industrial production on page 10 of the Global Perspectives™ book.

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