- Solid jobs report helps solidify counter-balance to trade tensions. We continue to expect a solid overall economic backdrop, bolstered by fiscal stimulus, to overwhelm the dollar impact of tariffs in 2018 on the way to eventual trade deals between the U.S. and its major trade partners. Friday’s jobs report helps to solidify this thesis based on: 1) solid and better-than-expected June job creation (213K), in addition to positive revisions to the prior two months, 2) benign 2.7% wage inflation, and 3) an increase in the labor force participation rate, which we view as a positive economic signal.
- More political uncertainty in the U.K. Theresa May’s Cabinet minister resigned, leaving prospects for a “soft Brexit” that would maintain close ties to the European Union very much in question. The news has sparked speculation that Brexit hardliners would try to oust May.
- What does an inverted yield curve mean? One of the most popular market-related discussions recently is on the yield curve. The reason being the yield curve (as measured by the 2-10 year Treasury spread) is at its flattest level since right before the financial crisis. Also, the past nine recessions have all been preceded by an inverted yield curve. It is important to note that the yield curve is not currently inverted, but that hasn’t stopped the masses from focusing on it. Here’s the catch, looking at the past five recessions shows that a recession didn’t officially start until an average of more than 21 months after the yield curve initially inverted. The S&P 500 Index, meanwhile, added an average of nearly 13% over this timeframe and was higher in every single instance. Today on the LPL Research blog we will take a closer look at this misunderstood signal.
- The week ahead. The big events of the week are not economic data points but rather President Trump’s Supreme Court pick, a NATO summit, and the start of second quarter earnings season. The U.S. data calendar will generate some interest, however, with consumer and producer prices, import/export prices, small business optimism, consumer confidence, and the monthly U.S. federal budget numbers on the docket. Energy outlooks from the U.S. Energy Information Administration, OPEC, and the International Energy Agency are also due out this week, followed by the U.S.D.A. agriculture supply and demand estimates. Overseas data includes Eurozone industrial production and a series of Chinese releases on foreign exchange reserves, trade, foreign investment, loan growth, and money supply.
- NFIB Small Business Optimism (Jun)
- France: Industrial Production (May)
- Italy: Industrial Production (May)
- UK: Industrial Production (May)
- Germany: ZEW Survey (Jul)
- Eurozone: ZEW Survey (Jul)
- Japan: PPI (Jun)
- Japan: Core Machine Orders (May)
- PPI Final Demand MoM (Jun)
- Wholesale Inventories (May)
- CPI MoM (Jun)
- Monthly Budget Statement (Jun)
- Germany: CPI (Jun)
- France: CPI (Jun)
- Eurozone: Industrial Production (May)
- Import Price Index MoM (Jun)
- Japan: Industrial Production (May)
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.
All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
All performance referenced is historical and is no guarantee of future results.
This research material has been prepared by LPL Financial LLC.
To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.
The investment products sold through LPL Financial are not insured deposits and are not FDIC/NCUA insured. These products are not Bank/Credit Union obligations and are not endorsed, recommended or guaranteed by any Bank/Credit Union or any government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible.
For Public Use – Tracking # 1-747393 (Exp. 7/19)