While nothing is certain when it comes to the markets, the one theme that seems to be reoccurring as of late is increased volatility. The market kicked off the week thinking that the tariff tensions between China and the U.S. may taper as the two nations indicated a willingness to negotiate on the matter. However, on Thursday President Trump asked his administration to consider tariffs on an additional $100 billion in Chinese imports, causing tumultuous swings across asset classes. The VIX, a measure of volatility in the market, closed the week above 21%.
The S&P 500 ended the week lower with about a two percent drop on Friday. Similarly, the 10-year treasury yield dropped about six basis points to 2.77%. Investors moved into safe-haven assets with both the yen and gold rallying over the week.
Outside the market jitters predicated on the potential threat of a trade war, the much-anticipated March unemployment data indicated a pick-up in wages, a boon to inflation, which could support the Fed’s path of tighter monetary policy. The unemployment rate remained steady at 4.1% and the payrolls rise surprised on the downside (103k vs est. 185k).
The pressure on the markets continued on Friday, as Fed chairman Jerome Powell delivered his first outlook on the economy. While Powell noted it was too early to discern the impact of a trade war on monetary policy and the economy, he noted that higher tariffs could boost inflation. Equities sold off on the back of Powell’s speech.
Earlier in the week, the Federal Reserve Bank of NY named John Williams as president and CEO of the FRBNY. He will assume the role in June. In this capacity, Williams will have a permanent vote on policymaking within the FOMC and serves as the committee’s vice chairman. The FRBNY also focuses on carrying out monetary decisions and oversees many of the country’s largest financial institutions.
This week…
Data streaming from the U.S. will be light relative to information received overseas. Folks will pay close attention to inflation data in the U.S., ECB Monetary Policy Meeting Accounts (provides an overview of the financial market, economic and monetary developments), German CPI and CNY trade data.
Key U.S. Data includes:
PPI data (Tuesday), CPI data, FOMC minutes (Wednesday), trade data (Thursday), weekly jobless claims, Feb JOLTS Job Openings (Friday), Michigan Consumer Sentiment and Baker Hughes Oil Rig Count.
Fed official James Bullard is scheduled to speak on Friday.
Overseas Economic Data includes: Swiss unemployment (Monday), German trade balance, CAD housing starts, GBP retail sales (Tuesday), NZ business confidence, JPY machine orders, CNY CPI/PPI data (Wednesday), AUD consumer confidence, GBP industrial/manufacturing production, AUD consumer inflation expectation (Thursday), AUD home loans, CNY FDI, French CPI, EUR industrial production, ECB Monetary Policy Accounts report, CNY trade data (Friday), German CPI and EUR trade data.
