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A Macro View: Is the antiquated mutual fund structure coming to an end?
Chart of the Week
- Risky assets remained under pressure, as investors see no end in sight to the ongoing trade war between the US and China. Talks between Beijing and Washington stalled this month, as President Trump accused China of reneging on a deal that the US said was almost completed. Both sides appear to be digging in for a prolonged fight, as neither party seems to have an incentive to strike a deal at this time.
- The Federal Reserve (Fed) indicated that it is comfortable with keeping the federal funds rate unchanged for “some time,” according to minutes recently released Wednesday from its April 30–May 1 meeting. The minutes mentioned that the Fed’s patient approach would remain appropriate in an environment of moderate economic growth and muted inflation pressures. The futures market has priced in higher expectations for Fed rates cuts later in the year.
- British Prime Minister Theresa May announced her resignation on Friday morning, bringing her turbulent three-year premiership to an abrupt end. With no Brexit withdrawal agreement in place, the prospects of the UK suffering a disorderly exit from the European Union now appears more likely.
- The yield on the 10-year US Treasury Note dropped to its lowest level since 2017, as the trade war has nervous investors seeking cover in safe havens. It fell below the yield on the 1-year for the second time this year, a warning sign of recession.
- Oil prices were on track for their most significant weekly loss this year, with Brent crude oil set for a decline of more than 5%, although it recovered almost 1% in early trading on Friday.
- Gold benefited from heightened trade tensions, rising above $1,280 per ounce, up 0.5% for the week.The dollar moved lower on Friday, away from its two-year high, after week manufacturing data and potential economic fallout from a trade war with China increased expectations for an interest-rate cut this year.
- Within equities, all of the various market capitalizations and styles posted negative results for the week. Large cap held up the best, while small cap had the largest decline; value outperformed growth in most market capitalizations except for small cap value, which trailed the most; international slightly outperformed domestic stocks, and developed markets outperformed emerging markets.
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