Back near highs, equity markets in the US experience the grind higher this week on the back of the upside of the bottoming rates. Into the end of the week, bond yields rose near monthly highs and the US curve steepened hard. The trade war is in the news again, this time optimism comes through the markets and we see this lead equities to the upside. Some officials from both nations are set to meet this coming week. US CPI data comes out better than expected with continued strengthening economic data which causes some confusion as to the coming proposed rate cuts out of the US Fed. Now there is a slight chance of a rates being held as is in the coming week. Into Friday there is officially a 20+% chance of keeping rates on hold.

News out of other central banks hit last week and continue this week. The ECB has announced continued stimulus measures with the possibility of a relaunch of quantitative easing.  ECB’s Draghi called for renewed economic growth support from fiscal authorities. Brexit continues to make ground this week as hopes of the UK finding a way around the Irish backstop helps the pound move up nearly 400 pips. However this came to a halt when PM Boris Johnson was not able to obtain enough MP votes for the new election.

Here is a look of last week’s stock market on a daily basis (red vertical lines split days).

Stock Market and Sector Overview

Here is a break down of the weekly performance in various stock market sectors (top chart):

  • Energy stocks +2.71%
  • Technology -0.69%
  • Financials +3.30%
  • Retail +5.62%
  • Utilities +0.38%

Overview of key markets last week (bottom chart):

  • Crude oil -2.93%
  • S&P500 +0.86%
  • Silver was -3.41%
  • Gold -1.21%
  • US dollar -0.25%

 

Weekly Economic Calendar

This weeks economic calendar has a very important news event early on in the week. The Fed Funds Rate decision, which is nearly 100% priced in for a rate cut of 25 basis points. There is other news throughout the world, which is heavy on the latter end of the week. There are many central banks that
Monday, Monetary policy meeting minutes out of Australia. This will affect the Aussie dollar.
Tuesday, no major news.
Wednesday, CPI data out of the UK and Canada. Crude oil inventories in the morning out of the US. The event we’ve all been waiting for, the FOMC meeting, statement, rate decision and conference. Which will give us indication of what is to come from the Fed in future meetings and what can be expected in the US markets/economy. Employment change and rate out of Australia with the Japanese monetary policy statement to wrap up the day.
Thursday, the BOJ press conference. The SNB monetary policy assessment early in the morning. retail sales and Monetary policy out of the UK as well.
Friday, Core retail sales out of Canada.

 

 

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