Your Weekly Update – Tariffs Still in Spotlight, Central Banks Stand Pat

Weekly Performance

US: S&P 500 Index +3.54%, Dow +3.25%, Nasdaq +4.17%
Europe: STOXX Europe 600 +3.05%, German DAX +3.63%, France CAC 40 +2.68%, U.K. FTSE 100 +1.89%
Asia: Japan Nikkei +1.36%, China Shanghai Composite +1.62%, Korea KOSPI +2.38%
10-Year Treasury yield: +3 basis points to 2.89%, WTI crude oil +1.27%, COMEX gold +.03%

Equity markets staged an impressive rebound from last week’s tariff-induced selloff after initial concerns that the move could spark a global trade war were pacified when President Trump announced that Canada and Mexico would be exempt indefinitely amid NAFTA negotiations, while other countries and U.S. industries could negotiate exclusions. Elsewhere, better-than-expected economic data, including Friday’s nonfarm payrolls that trounced economists’ estimates (313k jobs added vs. 205k expected), buoyed expectations for the Federal Reserve to hike interest rates when it meets March 20-21.

Overseas investors started the week digesting the results of Italy’s general election, which resulted in a hung parliament. Central bank meetings in Europe and Japan were also in focus. Though both banks maintained the status quo on monetary policy, the European Central Bank dropped its pledge to increase the size of its quantitative easing program, while the Bank of Japan held firm in the face of improving economic data as the bank focuses on getting inflation up to its 2% target.

This week the U.S. economy will be focused on inflation, retail sales and housing.  The CPI report comes out on Tuesday, with the headline inflation rate expected to nudge higher to 2.2% year-over-year in February, while the core rate is expected to remain unchanged at 1.8%. Producer prices and retail sales come out on Wednesday, while housing starts and building permits data are released on Friday. In Europe, next week’s calendar tends to be light, but industrial production estimates, which are expected to tick higher following previously released data in Germany & U.K. moved higher, should garner attention, along with Eurozone inflation on Friday.  In Asia, China’s monthly activity indicators will be in focus with industrial production, retail sales and fixed-asset investment data due out.  In Japan, the producer price index (PPI) and machine orders are the main data points to monitor.


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