Weekly Market Updates
Week Ending September 6
Equities traded higher during the Labor Day shortened week. The biggest market mover continues to be US-China trade news. Thursday, it was announced that in-person trade talks would resume in Washington DC in October. This was welcomed news compared to the last few weeks when it appeared both sides were hardening their trade stance by threatening higher tariffs. U.S. economic news also strengthened last week as job numbers, factory orders, durable goods and ISM Non-Manufacturing all beat economist expectations.
Long-dated U.S. Treasury yields finished the holiday-shortened week higher as yields on short-term U.S. Treasury bills pulled back. The movement of U.S. Treasury yields last week un-inverted the U.S. Treasury 2-year/10-year yield curve. An inverted yield curve is perceived as a recession indicator. U.S. Treasury yields pushed higher on the news of trade talks between the United States and China set to resume in October and the better-than-expected ISM Non-Manufacturing data.
Week Ending August 30
Concerns of lackluster global GDP growth have taken over equity markets, the latest affair was a 30-Year German Bund auction with negative interest rates. Despite the global backdrop, U.S. economic reports continue to resilience. Initial jobless claims, continuing jobless claims and home sales all were reported as expected.
Short-term U.S. Treasury yields increased last week. Conversely, long-dated U.S. Treasury yields pulled back. For the month of August, the two-year U.S. Treasury bond yield dropped by the largest monthly amount since November of 2008, while the 30-year U.S. Treasury bond yield dropped below 2.0% for the first time. Demand for government paper remains elevated as trade and tariff concerns along with geopolitical tensions and challenging global growth prospects weigh on investors.
Week Ending August 23
Equities started last week positive and looked to coast into the weekend until mid-day Friday when China decided to levy additional tariffs on $75b worth of U.S. goods and President Trump responded with additional US trade threats. This raised the geopolitical and global GDP growth risks which sent the S&P 500 down over 75 points and the Dow Jones Industrial Average tumbling 600 points.
Short-term Treasury yields rose moderately while long-term Treasury yields dropped moderately over the course of the week on talks of monetary policy and increased trade tensions between the United States and China. On Monday, yields rose across all durations on reports that Germany may uses fiscal stimulus if its economy slowed. Long term yields dropped on Tuesday as President Donald Trump called for the Federal Reserve to be more aggressive with interest rate cuts and advocated for payroll tax cuts.