Despite market turmoil data points to slow global growth

Macroeconomic news took a back seat to markets last week. The sell-off in China continued and the crisis in investor confidence, amidst the summer vacation season, led to a global retrenchment, with most global equity markets losing ground last week.

The market moves seem to reflect a downgrade by investors of their global growth expectations. Investors appeared to seek safety in classic market safe havens, such as U.S., German, and Japanese government bonds, as well as these currencies and gold. Evidence of an improving U.S. housing market and improving activity in Europe were shrugged off. Market fears seemed to take root in softer purchasing manager flash data in the United States and China, as well as weaker U.S. inflation. In our view, the data is pointing to slow global growth rather than a potential recession.

There is little key economic data to alter market sentiment. The next major U.S. economic release is likely the September 4 employment report. In the meantime, market signals will likely be driven by sentiment and central bank activity. Authorities in China appear likely to take additional steps to support their economy and markets in the face of their declining domestic stock market and slowing economic growth.

For more information, please go to:

Robert L. Haworth, CFA, is a senior investment strategist and Darrell Behnke is the Madison market leader for the Private Client Reserve of U.S. Bank.

This information represents the opinion of U.S. Bank and is not intended to be a forecast of future events or guarantee of future results. It is not intended to provide specific advice or to be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation. The factual information provided has been obtained from sources believed to be reliable, but is not guaranteed as to accuracy or completeness. The organizations mentioned in this publication are not affiliates or associated with U.S. Bank in any way.

Past performance is no guarantee of future results. All performance data, while deemed obtained from reliable sources, are not guaranteed for accuracy. Indexes shown are unmanaged and are not available for investment.

Click here to sign up for the free IB ezine – your twice-weekly resource for local business news, analysis, voices, and the names you need to know. If you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here.