Here are the latest updates in the performance and stocks affecting the federal government’s 401(k)-style retirement savings program, the Thrift Savings Plan (or TSP).
Stocks were on course to end the weekly losing streak until chaos in the trade war sent stocks falling more than 2% Friday. Stocks held steady at the top of the August trading channel for most of the week. Volatility had dropped and we were seeing minimal movement in equities that had been wild for the first half of August. The focus was on Jerome Powell’s speech in Jackson Hole where investors were searching for sign of the Fed’s plans in the coming months. Mr. Powell did not guarantee rate cuts but left them on the table. He addressed the trade war being a role in the global slowdown and that the Fed will act according to sustain expansion. The reaction to the speech was nothing spectacular; but the unsuspecting news to follow was.
China timed news for new tariffs on the U.S. to follow Mr. Powell’s much-anticipated speech. As anyone could guess, President Trump was quick to retaliate with threats via Twitter. He promised retaliation and even ordered U.S. businesses to seek alternatives to doing business with China. U.S. stocks crumbled instantly. Both the C and S-fund fell more than 2.5% on Friday alone. The weekly net was a loss of around 1.5% for both funds and thus the streak is continued to four weeks of losses.
All hope for progress in trade has vanished. What has risen is the chances of a recession and the chances of more rate cuts to come. It is questionable if the Fed’s efforts are even capable of correcting the economy if the ball drops. The house of cards is currently being held by consumer spending and the jobs market.
Bonds extended their gain streak this week but had to recover from early losses to have a modest gain of 0.09%; around 10 times less than the 0.96% gain the previous week.
Here are the weekly, monthly, and annual TSP fund returns for the week ending August 23rd:
The SPY (S&P 500 / C-fund) jumped around its 20 and 50-day EMA for most of the week. The index could not commit to either direction while awaiting the speech by Jerome Powell. The speech had little effect on the direction but the spark in more trade tension sent stocks back near the lows of August. The index hit lows on queue with rising support of the June lows and the last test of the 200-day EMA. The 200-day EMA is not far to be tested again. Will stocks have the vigor to climb back up or will the bulls surrender their efforts in the midst of the ongoing trade battle? The C-fund fell 1.42% for the week.
The Dow Completion Index (S-fund) shared the action of large caps but the 200-day EMA was the moving average at the top of the trading channel rather than the bottom. Small caps also approached the lows August without reaching them. The respective rising support that held large caps was not reached for the index. Nonetheless the S-fund lagged the TSP funds with a loss of 1.62% for the week.
EFA (EAFE Index /I-fund) filled a couple of open gaps in this weeks action and also took a tumble with U.S. Stocks on Friday but on a lessor scale. An open gap that was approached was left open for the week. The I-fund fund was able to keep some gains for the week after a small sell off on Friday to end the week up 0.08% for the week.
AGG (Bonds / F-fund) was juggling between gains and losses for the week and even fell below the support of a the trading channel of August. With the added uncertainty in trade Friday bonds reclaimed early losses to go into positive territory for the week but was unable to end back within the trading channel it fell from Thursday. The F-fund led the TSP funds with a gain of 0.09%.
Good luck and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at the Market Comments page. If you need more help deciding what to do with your account, perhaps one of our Premium Services can help.
The legal stuff: This information is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this data. Do not buy, sell or trade the funds mentioned herein based on this information. We may trade these funds differently than discussed above. We use additional methods and strategies to determine fund positions.