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Weekly Update – June 14, 2019

  • Despite a Friday pick-up, global stocks declined in a week largely devoid of meaningful directional drivers. The communication services and consumer discretionary sectors outperformed. The healthcare sector detracted value. Treasury prices were stronger with the yield curve steepening, with the ten-year note yielding at 2.09%. The U.S. dollar rose against the euro but fell versus the yen. Gold rose. Oil prices fell due to bearish inventory data, though attacks on two oil tankers in the Gulf of Oman drove prices sharply higher late in the week.
  • President Trump indefinitely suspended tariff threats against Mexico after it agreed to take strong measures to stem the tide of illegal immigration, including returning asylum seekers to Mexico as they await adjudication of U.S. asylum claims. While there have been no major developments between the United States and China this week, President Trump is scheduled to talk this month with Chinese President Xi at the G20 summit. Expectations for a resolution remain low.
  • UK GDP decreased, due to pressure from Brexit. Industrial production and manufacturing production also declined. Germany’s consumer price index (CPI) dropped in May. Japan’s industrial production fell 1.1% on a yearly basis, in April. Business sentiment among major companies in Japan remained low, reflecting worries over the U.S.-China trade dispute.
  • May economic statistics from China were mostly upbeat. Outstanding loans rose. Spiking food prices prompted an increase in CPI to its highest level since February 2018. Producer price inflation (PPI) also rose, in line with expectations. The industrial economy remained a drag. Retail trade rose, beating market expectations.
  • The total number of workers hired rose to new heights in April, according to the Job Openings and Labor Turnover Survey (JOLTS). Still, the gap between openings and available workers remained large. U.S. producer prices rose in May, primarily due to a surge in the cost of hotel accommodations; by contrast, consumer prices barely rose. Both the cost of exports and imports fell in May, reflecting the ongoing trade battle between the U.S. and China. NFIB small business optimism rebounded in May, pushing back toward historical highs.

CPWM Weekly Market Monitor (2019.06.14)

 

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