This week was supposed to mark the eighth attempt at infrastructure week in Washington and it, too, derailed this morning. But the joke may not be funny much longer.
Emerging markets were hit hard by rising trade tensions, while Europe and India elections will take place this week.
U.S. Treasury yields declined again last week, as global trade worries worsened. The largest declines occurred on Monday and Wednesday, led by the 5- and 2-year maturities. The Federal Reserve (Fed) reinforced a patient outlook for interest rate policy, taking a wait-and-see approach.
Global high yield bonds sold off amid the latest spike in market volatility, along with other risk assets. Yet this does not change our view that exposure to the asset class is important for fixed income investors in an environment where carry, or coupon income, is becoming the main driver of bond returns.
On the latest edition of Market Week in Review, Quantitative Investment Strategist Abraham Robison and Sophie Antal Gilbert, head of AIS business solutions, discussed the recent setback in U.S.-China trade negotiations and what it may mean for markets going forward. They also chatted about the trade war’s potential impacts on U.S. Federal Reserve (the Fed) monetary policy and Chinese fiscal stimulus.
As millions tuned in to watch the HBO series Game of Thrones in its series finale this past weekend, deteriorating trade relations between China and the U.S. has led to some stock market carnage analogous to the bloodshed the series is known for. In the week ending May 10th the S&P 500 fell by 2.2%, the worst weekly decline since December.
It seems that so much happens in a given week these days. However, this week could be particularly momentous as we start to get answers on some key questions that have implications for global markets. Here are five events to watch:
Stocks continued to decline last week, as a worsening trade dispute dominated the news. The S&P 500 Index fell 0.7% for the week, with industrials and technology both hurt by trade worries. The financials sector was also weak, as banks were hit by a decline in interest rates. Defensive areas of the market fared better, with REITs, utilities and consumer staples being the standouts.
Continuing the discussion from last week about the discussion of Leverage and Liquidity, we focus a bit on why there are some economic and market metrics that don’t corroborate the “feelings” that permeate discussions.
Market pundits have doubted this bull market every step of the way. Each pullback put into evidence that the cycle had reached its endgame; each recovery off the lows furthered the disequilibrium caused by monetary malfeasance. And yet, not more than two weeks ago the market stood as high as it ever has.
A quick trivia question: what do Chelsea Handler, French President Emmanuel Macron, Canadian Prime Minister Justin Trudeau and at least a dozen of the 23 Democrats running for president this year have in common?
Trade negotiations between the U.S. and China have suddenly erupted into a storm of tweets, threats, tariffs and retaliation.