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Investors seeking out safer, more conservative investments to combat market volatility have moved their assets to the bond market causing bond yields to sink to a three-year low.
Investors began moving to higher ground as a result of continuing trade conflicts between the U.S. and China. Investors and analysts fear that a prolonged conflict could cause global growth to decline.
In July, the Federal Reserve lowered interest rates by a quarter point, indicating slowing economic growth. Now, central bankers in New Zealand and Thailand are doing the same because of their trade relationship with China.
The rush by American investors to the bond market could also be an indicator to the Federal Reserve that more rate cuts will be necessary this year.
The No. 1 concern among registered investment advisor clients is a recession, E-Trade Advisor Services found in its Independent Advisor Sentiment survey.
The survey was conducted from in July and sampled 305 independent RIAs.
Among the survey’s other finding were that while clients weren’t overly concerned about market volatility, advisors have remained laser-focused on. The top three portfolio risks for RIAs were:
68% Market Volatility
56% Interest Rates
43% Flattening/ Inverted Yield Curve
Additionally, advisors are also trying to curb fearful investors from letting their emotions make their financial decisions. According to the survey, 43% of advisors said that the biggest mistake clients make is trying to time the market.
Oil Demand Drops
The demand for oil hit its lowest point since 2008 this week and the trade war between the U.S. and China rages on.
This decline in demand for oil has analysts worried because oil demand is usually a sign of economic growth. Experts at the International Energy Agency said in their report this week that outlook for oil this year and next year was not good, calling its status “fragile.”
The IEA also concluded in the report that there was “growing evidence of an economic slowdown.”
AdvisorNews Managing Editor Cassie Miller may be reached at cassie.miller@Adnewsfeedback.com. Cassie has an extensive background in magazine writing, editing and design. Follow her on Twitter @ANCassieM.