The FOMC meeting was the center of attention in the news wire this week and equities were already riding the highs of a no hike expectation. The bullishness came in in anticipation of a no rate change decision with a slight hint at a rate cut, or a rate cut in the coming month and three more anticipated this year. The week opened just a few percent off all-time highs in all equity markets. US data continued to come out weak, conducive to upcoming rate cut decisions.

ECB’s Mario Draghi added fuel to the stimulus fire by announcing that if the European economies outlook does not improve, they would be adding stimulus. This put pressure on Powell through Trump to provide the US with a “level playing ground” aka stimulus. Even hinting at demoting the current Fed chair. In other economic news, the G20 meeting is up ahead with Xi and Trump set to meet which helped bonds and global equities rally.

Midweek the FOMC statement rolled around and all-time highs broke through, the equity market was satisfied with the expansionary monetary policy and future hinting at rate cuts. There is a rate cut pretty much priced in at about 80% in the July meeting. Now that there are monthly meetings, any month could be a rate decision month. The key indicator in the FOMC was the removal of the word “patient” from the monetary policy statement in which Fed Chair Powell and other Fed members verbally hinted at the further stimulus.

Late in the week in the US indices opened on all-time highs along with a 5% spike in WTI crude oil. Crude oil was propelled higher on news of a US surveillance drone being shot down near the Straight of Hormuz.

In rate news, the US 10-year dropped below 2% for the first time in 3 years while the expansionary monetary policy statement weighed on the USD. This helped gold move back above the $1,400 level for the first time since 2013. Gold found its way into the $1,415 level before reversing back into $1,400 to end the week. To close the week, the quad witch rocked markets, the options and futures expiry. The volume came in and equities slipped slightly.

Trade sentiment was further buoyed by a report VP Pence would be postponing a key China policy address indefinitely amid “positive signs” of progress ahead of the Trump/Xi meeting.


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 up 4.23%
  • Technology up 2.96%
  • Financials down 0.13%
  • Retail up 0.45%
  • Utilities up 0.36%

Overview of key markets last week (bottom chart):

  • Crude oil down 9.58%
  • S&P500 up 1.67%
  • Silver was up 3.13%
  • Gold up 4.24%
  • US dollar down 1.31

Weekly Economic Calendar

A news heavy week coming up with the Fed Chair Powell making his announcement and the G20 meeting ahead which will impact the trade talks ahead between Xi and Trump. To add to all of this, OPEC meets which will shake up the already volatile oil market.
Sunday, Lowe from Australia speaks, watch the Aussie dollar.
Monday, no high impact news.
Tuesday, the OPEC meeting runs all day. Out of the US, the CB consumer confidence, and the highly anticipated news out of Powell hits throughout the day. Out of New Zealand we have the official cash rate and the rate statement which will move the Kiwi dollar.
Wednesday, Inflation report hearings out of the UK and durable good orders out of the US. To end the day business confidence out of New Zealand.
Thursday, final GDP out of US and the G20 meeting day 1 begins. This could be the beginning of the Xi and Trump trade talks.
Friday, current account out of the UK, GDP data out of Canada and the BOC business outlook survey. This also happens to be the second day of the G20 meetings.
Saturday, Chinese manufacturing PMI.

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