Mixed Market and Tariff Issues
Last week US Stock Market Indexes were mixed with the Dow Jones down, the S&P 500 flat, the NASDAQ and Russell 2000 Indexes up. On the Bond side, the Barclays Aggregate Bond Index rose .13%. Overseas the Markets were also mixed for the week.
Tariff Talk Looking Real?
How important is cooperative, smooth trade? According to Barron’s Magazine, the European Union is our largest trading partner with over $700 billion worth of goods traded annually. The United States and Canada trade approximately $600 billion in goods and $550 billion with Mexico. Obviously that’s a lot of cash, and that’s on goods and not even services!
Tariffs are scheduled to begin shortly. Our trading partners are not backing down, as they are announcing retaliatory tariffs in response to US imposed tariffs. If this issue doesn’t right itself soon, import prices will rise on many goods, as will prices of goods that US companies export to our partners. This could temporarily increase demand of US manufactured goods consumed in the United States. The only good result will be quick negotiated trade agreements that provide a more level playing field for all participants.
The 10 year US Treasury Yield fell, ending the week @ 2.92%, down modestly from 2.94% the week prior.
The Federal Reserve announced the 2nd rate hike of 2018 on Wednesday and gave indication that rates may rise a total of 4 times instead of 3 in 2018. The tone of the Fed’s statement appeared more hawkish. Interestingly, the 10 Year US Treasury yield fell, most likely because of heightened tariff talk. Over the pond, the European Central Bank (ECB) announced they will end their bond buying program by year end. I wonder if this will actually happen because our economy was on a much stronger footing when our Fed stopped our bond buying.
Economic Data for the Week
This week’s data is mostly on Housing; Monday will see the Housing Market Index, Tuesday, housing starts for May will be released and existing home sales on Wednesday. Thursday will see the reading on Economic Leading Indicators.
Question of the Week
What country does the United States import the most wine?
d) South America
Answer to Last Week’s Question of the Week!
The question was, “List in order, from highest to lowest the Countries with the largest populations.”
b) United States
The correct order is China (1,330,000,000), India (1,296,000,000), United States (330,000,000), Indonesia and Brazil.