Equities Hit New Records as Inflation Underwhelms

 

US equities edge higher to new records. Speculation that the Fed will maintain its accommodative monetary policy helped lift US equities to new record highs. The S&P 500 closed 0.1% higher to close at 2,943 while the tech-heavy Nasdaq composite rose 0.2%. Today, office space provider WeWork also disclosed it has also filed paperwork to go public, joining the string of large tech companies going public in a banner year for tech IPO’s.

 

 

China trade talks move back into focus. The next round of China-US trade talks gets underway this week. Steve Mnuchin told reporters that the enforcement mechanisms in the trade agreement are “close to done.” Chinese President Xi Jinping will come to the US “soon” as both sides are eager to finalize an agreement. Any progress (or lack thereof) could be a catalyst for global assets.

 

 

Inflation growth remained stagnant despite upsurge in spending during March. US markets welcomed a 0.9% bump in consumer spending last month–the largest monthly increase in nearly 10 years, but the strength in consumer spending did not translate into faster inflation as Commerce Department’s reported that the core PCE price index recorded a paltry 1.6% uptick YoY in March. Additionally, personal income only managed a 0.1% increase MoM, contributing to doubts that the robust spending will continue much longer. The data reinforces the case for the Fed to hold rates steady and possibly even examine the merits of a future cut when they kick off their two-day meeting tomorrow.

 

 

Week ahead. In addition to the Fed’s rate decision, markets will get the latest consumer confidence data tomorrow, followed by the latest US manufacturing PMI’s on Wednesday. Thursday will bring the latest durable goods orders with the always important jobs report closing out the week.