Weekly Market Drivers | LPL Financial Research

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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 →

Market Update: Fri, May 24, 2019 | LPL Financial Research

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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 →

Fed Members Side With “Transitory” Inflation

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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.

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Market Update: Wed, May 22, 2019 | LPL Financial Research

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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 →

Yields Defy Inflation Expectations

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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.

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Market Update: Tue, May 21, 2019 | LPL Financial Research

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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 →