Overall it was a fairly good week for stocks (S&P500: +1.23%, MSCI Euro: +1.39%, MSCI EM: +0.54% in USD) even though uncertainty surrounding endless trade disputes continued to grow. President Trump’s threats became clearer at the very end of the week as The Wall Street Journal reported that he was about to announce new tariffs on $200 billion in Chinese imports, putting at risk high-level trade talks between the U.S. and China. However, to mitigate the detrimental effects of this decision on the purchasing power of the U.S. consumer, the tariff level would be now set at 10%, i.e. significantly below the 25% initially targeted by the Trump administration. Meanwhile NAFTA talks between U.S. and Canadian officials failed to make any progress.
On the economic front, U.S. consumer prices rose less than expected in August and a report from the U.S. Labor Department showed that underlying inflation pressures seemed to be decreasing, making the case for the Fed to possibly slow down its pace of rate hikes. Besides, the 10-Year U.S. Treasury yield remained virtually unchanged around 300bps.
On the other side of Atlantic, the ECB confirmed the plan to wind down its asset purchases by the end of the year and keep the interest rates at a record low as expected. In the U.K., the BoE maintained its base rate at 0.75% while the brexit negotiations are still deadlocked.
Find our full report here: https://www.trackinsight.com/weekly-flow-report/2018-09-14/global