Trade Continues to Simmer, Brexit Has a New Wrinkle
US: S&P 500 Index -1.2%, Dow -0.7%, Nasdaq -2.3%
Europe: STOXX Europe 600 -1.5%, German DAX -1.9% France CAC 40 -2.2%, U.K. FTSE 100 -1.6%
Asia: Japan Nikkei -0.6%, China Shanghai Composite -1.0%, Korea KOSPI -0.5%
Rates/Commodities: 10-Year Treasury yield -7 basis points to 2.32%, WTI crude oil -6.3%, COMEX gold: +0.7%
Markets continue to digest recent escalations in the trade negotiations between the U.S. and China, as the White House moved to blacklist Chinese telecommunications giant Huawei from conducting business in the U.S. Continue reading
Markets continue to follow trade news; tone improves overnight after a rough week. Global equity markets advanced overnight and U.S. futures point to a higher open after the Trump administration signaled that some relief from restrictions on Chinese telecom giant Huawei could be part of a final trade deal. Continue reading
Investors just got more details on Federal Reserve (Fed) policymakers’ views of inflation.
Minutes of the Fed’s most recent meeting, which ended May 1, showed that “many participants” considered slowing consumer inflation as “transitory,” and agreed that the Fed’s current patient approach should help stoke economic growth and inflation. Policymakers’ optimistic view on inflation runs counter to a growing opinion in financial markets that slowing growth in core personal consumption expenditures (PCE) could warrant lower rates.
Market searches for direction. The S&P 500 Index is sliding again this morning amid more back-and-forth in the U.S.-China trade dispute. Many sentiment indicators are flashing signs of fear despite the benchmark index just 4% off its all-time closing high. Continue reading
FOMC minutes out this afternoon. The Federal Open Market Committee (FOMC) minutes will be released at 2pm EST today. The market is expected to have an outsized focus on discussions surrounding inflation, particularly in terms of the Federal Reserve Bank’s (Fed) overall support for Powell’s assertion that “transitory factors” were largely responsible for softer core inflation readings in Q1. Continue reading
The S&P 500 Index has officially gained each of the first four months of the year for the first time since 2013. This comes on the heels of the best first quarter since 1998. Six straight months in green has been the best monthly win streak to start a year, and that last happened in 1996.
Global uncertainty has dominated the direction of long-term interest rates recently.
Nominal Treasury yields have converged with breakeven rates, or market expectations for inflation (calculated from Treasury Inflation-Protected Securities yields). As shown in the LPL Chart of the Day, the difference between the 10-year Treasury yield and 10-year breakeven rate has fallen to the smallest spread in 16 months, hinting that bond investors may be underpricing the future pace of inflation.
Trade dispute driving increased volatility, but markets continue to price in an eventual deal. The S&P 500 Index fell 0.7% yesterday and the Nasdaq fell 1.5%, pushed lower by the day’s shift in tone on trade, after the Trump administration placed strong restrictions on the use of technology from Chinese telecom giant Huawei due to strong national security concerns. Continue reading
We consider earnings season a success based on the amount of upside to prior estimates generated by S&P 500 Index companies despite several headwinds. Companies handily beat expectations to get first quarter earnings up to flat, as shown in the LPL Chart of the Day.
More trade escalation. U.S. stocks are starting the week in the red as investors brace for more trade-related volatility. On Friday, the U.S. announced it would ban U.S. companies from doing business with Huawei Technologies Co. Ltd. Continue reading