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September 14, 2018

US-China Trade War Back in Spotlight


Yields Continue to Rise

Financial markets fluctuated throughout the day as uncertainty surrounding the trade war with China escalated, while factory and retail data portrayed further strength in the US economy.  Major US equity indices finished near even for the session, as the S&P 500 (+0.03%) was able to squeeze out its fifth consecutive day of gains.  Treasurys sold off for the third time this week, with yields/swaps rates finishing 2-4bps higher across the curve.  The yield on the 10-year note is closed the trading session just under 3.00%, a level...

September 13, 2018

Consumer Price Growth Slows, Tech Stocks Rebound


Curb Your Inflation

For the second time in as many days, inflation data in the US failed to meet market expectations.  Today it was the Labor Department’s report on consumer prices, where the headline index recorded a seasonally adjusted 0.2% MoM rise (+0.3% expected) during August.  The modest increase corresponded with a 2.7% annualized uptick, falling from the prior month’s +2.9% YoY reading.  Excluding the volatile food and energy components, the core CPI index climbed 0.1% (rounded up from +0.08%), also missing median forecasts of a 0.2% rise. ...

September 12, 2018

US-China Trade Outlook Brightens


Producer Price Data Puts Brakes on Inflation Euphoria

Just when it seemed like all key economic indicators were pointing towards an uptick in inflation, today the Labor Department’s report on U.S. business prices did not support that recent trend.  For the first time since February 2017, there was a monthly decline recorded in the producer-price index (-0.1%).  The majority of the downturn was attributed to prices falling in the volatile food (-0.6%) and trade services (-0.9%) components, which more than offset price increases in a few of the tariff-...

September 11, 2018

Yields Climb Higher and Higher


Stocks Gain, Treasurys Slump   

Today US financial markets looked past the ongoing trade war concerns with China and Canada as risk assets moved higher.  The three major equity indices finished with gains between 0.35%-0.65%, driven by strength in the technology and energy sectors.  US Treasurys sold off sharply, with yields/swap rates rising 3-6bps across the curve.  The yield on the 2-year note climbed to its highest level in the past decade at 2.745%, as the probability for two additional quarter-point hikes by the FOMC in the remainder of 2018...

September 10, 2018

Trade Uncertainty Continues to Restrict Risk Assets


Trump Takes a Bite Out of Apple

As the queue of threatened tariffs on Chinese imports continues to build, so does the concern from American companies who stand to be negatively impacted by the trade war.  This weekend Apple Inc. was thrust into the spotlight after the tech-giant submitted comments for the first time to the U.S. Trade Representative, outlining the negative impact to be caused by the tariff battle on many of its major products.  President Trump took to Twitter to offer his solution to the problem…
Apple prices may increase...

September 7, 2018

Treasurys Selloff as Employment Data Impresses


Wage Growth Finally Joins the Party

Today the Labor Department released its comprehensive employment report for August, displaying robust results across most sectors.  Looking at nonfarm payroll growth, a 201,000 increase in jobs was recorded, which beat estimates of +190,000 and presented a strong rebound from the prior month’s downwardly revised +147,000 level.  Hiring was strongest in professional and business services (+53k), trade and transportation (+37k) and construction (+23k), while the manufacturing sector unexpectedly reported a 3k contraction in...

September 6, 2018

Trade Uncertainty Tempers Financial Markets


Risk Assets Can’t Find Footing

Technology shares saw their third consecutive session of declines while Treasurys rallied as financial markets continued to exhibit caution amidst the volatility in emerging markets and ongoing trade tariff uncertainty.  The selloff in emerging markets extended for a seventh day, bringing the year-to-date decline of the MSCI Emerging Markets Index to almost 20% and raising the fear of contagion amongst developing economics.  Argentina, Brazil, and Turkey have been impacted the most within wave of selling, and ETF’s tracking...

September 5, 2018

Trade Concerns Magnified as Deficit Grows


Trade Gap Widens (America Not First Yet)

Today’s report on trade from the Commerce Department confirmed the ongoing trade deficit the US faces with its counterparties around the world.  On a seasonally-adjusted basis, the overall US trade deficit rose to a five-month high of $50.08 billion during July.  It was a 9.5% increase from the prior month, representing the largest monthly jump since March 2015.  The particularly sensitive trading relationships with China and Canada did not receive any relief within the data, as the deficit with China reached a...

September 4, 2018

Manufacturing Remains Strong Despite Trade Uncertainty


NAFTA Not Looking Great Again

Over the weekend President Trump did not appear to make much progress on the ongoing trade discussions with Canada as he maintained his “America First” stance.  “There is no political necessity to keep Canada in the new NAFTA deal. If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out,” Trump tweeted on Saturday morning.  One of the central hurdles for the Trump administration in getting an agreement finalized is gaining Congressional approval for any deal – which would be made much more unlikely...

August 31, 2018

Trade Uncertainty Continues to Weigh on Financial Markets


Canada Left Out in the Cold…For Now

Today’s much anticipated deadline to the trilateral trade negotiations between the US, Mexico and Canada brought forth minimal clarity as to the status of NAFTA or its successor agreement.  Despite four days of “constructive” discussions, the sides were unable to agree upon Canada’s definitive inclusion into the previously established trade agreement between the US and Mexico, albeit U.S. Trade Representative Robert Lighthizer informed the public that talks would resume next week and not simply expire as many thought it...


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