Prior Week Summary
Despite intensifying global growth fears, U.S. equity markets marched higher last week, buoyed by a solid start to first-quarter earnings season and continued progress in U.S.-China trade talks. U.S. Treasury Secretary Steve Mnuchin indicated that the U.S. and China agreed to an enforcement mechanism for the potential trade deal, eliminating an obstacle that has plagued the negotiations from the beginning. Speaking to reporters about the enforcement mechanism on Saturday, Mnuchin said, “We’ve already agreed there’s a big component of this that there will be real enforcement on both sides, including a detailed enforcement office on both sides with significant resources.” In economic news, updated data for factory orders, durable goods orders and CPI moved in line with analyst estimates, but a consumer confidence measure fell below expectations.
The E.U. agreed to extend the U.K.’s deadline to leave the bloc to October 31, 2019, averting a no-deal exit on Friday and setting the stage for continued cross-party talks between Prime Minister Theresa May and Labour party leaders. Elsewhere in Europe, the European Central Bank held rates steady after their policy meeting on Wednesday, only days removed from the International Monetary Fund’s decision to cut its global growth estimate 0.2%, citing a worsening global economic outlook.
The Look Forward
Market participants will be awaiting updated data on the manufacturing sector, retail sales and housing starts, as well as first-quarter earnings from a number of high-profile U.S. corporations and financial institutions. Additionally, $42 billion of 3-month Treasury Bills, $36 billion of 6-month Treasury Bills and $17 billion of 10-year TIPS head to auction.
Market Implied Policy Path (Overnight Indexed Swap Rates)
Fixed Income Snapshot
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