The anticipated risk premium for the Global Market Index (GMI) saw an upward trend in August. GMI, which is an unmanaged portfolio weighted by market value encompassing the major asset classes, is currently projected to yield an annualized return of 6.0% above the “risk-free” rate in the long term. This figure represents an increase of 20 basis points compared to the forecast from last month.
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Significant events can unfold over a weekend, such as Sunday’s alarming nuclear test conducted by North Korea. Reports indicate that preparations are underway for another ballistic missile launch, which may keep the world on edge for the forthcoming week and beyond.
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The latest edition of The US Business Cycle Risk Report has been published and disseminated to subscribers as of September 3rd.
By Tim Harford
Q&A with author via Smithsonian.com
Q: What inspired you to write a book that explores the modern economy through specific inventions?
A: I experienced a slight sense of frustration. As an economist, I find economics can often feel abstract and impersonal, even though I view it differently. As a writer, I sought a narrative that would effectively convey ideas, leading me to produce a technological history filled with examples that could teach valuable economic lessons through specific narratives.
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According to reports from the US Labor Department, companies added 165,000 jobs last month. This figure fell slightly short of the consensus forecast from Econoday.com. However, the year-over-year trend remained stable in August, suggesting a potential stabilization in the two-year slowdown that began in early 2015, maintaining a healthy growth rate.
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In August, a positive trend continued for most major asset classes, providing a bullish environment. Almost every segment of the global markets recorded gains, with emerging market stocks leading the way. The only categories that saw declines were US junk bonds and real estate investment trusts (REITs), which experienced slight declines. Overall, performance was largely positive.
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ADP reported a stronger-than-anticipated increase in US private employment for August, indicating that the downtrend in the labor market’s annual growth rate over the last two years may be leveling off. If this holds true, we might see confirmations in the upcoming payroll update from the Labor Department.
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Demand for safe-haven Treasuries surged yesterday, resulting in the benchmark 10-year Treasury yield hitting its lowest level in nearly ten months. What is driving this decrease in a key interest rate? A mix of factors, including renewed concerns over North Korea’s latest missile test and potential economic impacts from Hurricane Harvey, coupled with lackluster inflation rates observed in 2017.
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Hurricane Harvey has severely impacted the Houston area, which was poised to contribute 2.4% to the nation’s economy this year. However, the overall repercussions for the US economy are expected to be mild, leaving current third-quarter growth forecasts mostly intact for now.
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Last week, global markets experienced gains across all broad categories, as evaluated through a range of exchange-traded products. Leading the charge were emerging market stocks, followed closely by US real estate investment trusts (REITs).
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