March 2018 – What’s going on in the markets?


Here’s a one line summary of the current state in the markets, worldwide (as of early March 2018):

US in General
  • Market has went up for years without correction, so recent pullback doesn’t indicate change in market dynamics, just a pullback.
  • Interest rates rose. 10-year rate around Fall 2017 was between 2 to 2.35 and in February 2018, it rose to as much as 3.0
  • Real fear was triggered by employment data that showed wage increase, which is the first sign of real inflation we’ve seen in years.
  • More importantly, this spooked the market that the Fed would raise rates and tamper signs of inflation. This is less accommodative and not good for growth.
US Markets
  • 4Q 2017 GDP growth is at 2.5%; next release scheduled for 28 March, 05:30
  • Short term interest rate targeted by the Federal Reserve’s Federal Open Market Committee (FOMC) is at 1.50%
  • 10-Year T-Bill yield is at 2.84%, higher than Fall 2017.
  • Real GDP estimate is at 2.50 for 2018, 2.10 for 2019, and 2.00 for 2020.
  • Unemployment rate is at 4.00% right now and is expected to fall over the next 2 year
  • Japan has been in a deflationary environment since the 90’s and continues to try to stimulate inflation (their rates are super low; 10yr around 0%)
  • Their Real GDP (yoy) is at 1.5 for Q4 2017.
  • Unemployment rate has been pretty stagnant and hovers around 2.8.
  • Industrial production (yoy) has been between 4 to 6 throughout 2017.
  • 10 year generic government bond has a yield of 0.06
Emerging Markets


  • China’s GDP is at 6.8 for Q4 2017 and maintains at target of 6.5% for 2018.
  • Chinese Central Bank is focused on quality growth, and reducing systematic risks.
  • It is currently on a slightly hawkish stance, and has raised rates to support a deleveraging drive to reduce systematic risks
  • Increased regulation and restricted the growth of companies with large debt levels until they pay off debt
  • THIS IS TOO SPECIFIC – causing some companies to sell of debt (Wanda properties) to sell of assets to bring down it’s net gearing ratio.
  • This is because interest rates were low in the past year, and companies borrowed money to finance there operations leading to large growth (ie. Evergrande)
  • China has 1 Year Lending Rate of 4.35%.


  • Indian government has decided to tax all the Long Term Gains (>1 year) from February 1, 2018.
  • After announcing the LTCG tax, Indian market fell by almost 9% in the month of February alone.
  • YTD, Indian markets have returned -0.70%
  • Real GDP for 2017 is at 7.10 and the unemployment rate for 2017 is at 8.8
  • 12 months T-Bill have an yield of 6.63%
  • 10 Year government yield is at 7.74%

Brazil/Russia, etc:

  • Still remain emerging markets and more dependent on oil/commodity prices/currencies than others
  • Politics of greater concern but have participated in market rebound with rest of EM
  • European Central Bank (ECB) is taking similar measures to Fed because the economic situation is global.
  • The ECB is dovish, and has been in Quantitative Easing (QE) since the financial crisis through buying bonds and lowering borrowing rates
  • It is slowly putting the brakes on QE by cutting it’s bond purchasing amount each month, but extend its QE program duration
  • GDP (yoy) for European union is at 2.7% while the unemployment rate is at 7.73% (as of 12/31/2017)
  • Britain has a lot more complexities and politics involved, making it harder to follow but rates remain very low
  • Brexit details still up in air, seems like 2019 will be the year


By | 2018-03-12T02:01:45+00:00 March 3rd, 2018|

Leave A Comment