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November 10, 2016 Article 1 min read

Executive summary 

  • Domestic equities retreated in October in the face of heightened volatility, increasing expectations of an interest rate hike by year-end, and the headwind to corporate earnings from a strengthening dollar.
  • International stocks had a mixed month, with emerging market equities adding to their impressive year-to-date gains, and developed market stock returns slipping in the face of the stronger dollar.
  • After a sluggish first half, the U.S. economy expanded at a robust 2.9% rate in the third quarter, while the labor market continued to tighten.
  • Performance was negative across most fixed income categories, with the exception of high-yield bonds, as the yield curve steepened.
  • The pickup in growth last quarter coupled with continued tightening in labor market conditions point to the probability of the Fed raising rates by a quarter point in December.