Equities Take a Rest

April 22, 2019 Chatham Financial

Prior Week Summary

U.S. equities were little changed from a week prior, save for modest gains by the Dow Jones, amid mixed first-quarter corporate earnings and equally mixed global growth data. In U.S. economic news, retail sales topped analyst expectations along with the Empire Manufacturing Survey. In China, GDP, retail sales and industrial production figures all topped estimates. Reports on Wednesday suggested that China may look to keep the momentum going by implementing a stimulus plan centered on automobiles and electronics. Elsewhere, Germany cut its 2019 GDP forecast to 0.5% after forecasting a 2.1% 2019 GDP growth rate only one year ago.

A number of Fed officials spoke last week on monetary policy. Notably, Chicago Fed President Charles Evans said, “I can see the fund's rate being flat and unchanged into the fall of 2020. For me, that’s to help support the inflation outlook and make sure that it's sustainable at two or a little bit above.”

U.S. and Chinese officials will continue trade negotiations at the end of the month in Beijing. Reports surfaced mid-week suggesting that the two sides hope to have a finalized deal by early May, which would then set the stage for a possible Trump-Xi signing summit.

The Look Forward

Market participants will get updated numbers on existing and new home sales, durable goods orders and a consumer confidence measure, but all eyes will be on Friday’s first-quarter GDP release. Additionally, $41 billion of 5-year Treasury Notes, $32 billion of 7-year Treasury Notes and a host of other Treasuries head to auction this week.

Rates Snapshot

Sources: Bloomberg Finance L.P., (Treasuries) Chatham Financial (Swap Curves), FHLB Boston, Chicago, Dallas, Des Moines for FHLB Advance Rates. Wells Fargo Brokered CD Indications.

 

Market Implied Policy Path (Overnight Indexed Swap Rates)

Source: Chatham Financial

 

Fixed Income Snapshot

Source: Bloomberg Finance L.P.

 


Disclosures

Chatham Hedging Advisors, LLC (CHA) is a subsidiary of Chatham Financial Corp. and provides hedge advisory, accounting and execution services related to swap transactions in the United States. CHA is registered with the Commodity Futures Trading Commission (CFTC) as a commodity trading advisor and is a member of the National Futures Association (NFA); however, neither the CFTC nor the NFA have passed upon the merits of participating in any advisory services offered by CHA. For further information, please visit https://www.chathamfinancial.com/legal-notices/.

Transactions in over-the-counter derivatives (or “swaps”) have significant risks, including, but not limited to, substantial risk of loss. You should consult your own business, legal, tax and accounting advisers with respect to proposed swap transaction and you should refrain from entering into any swap transaction unless you have fully understood the terms and risks of the transaction, including the extent of your potential risk of loss. This material has been prepared by a sales or trading employee or agent of Chatham Hedging Advisors and could be deemed a solicitation for entering into a derivatives transaction. This material is not a research report prepared by Chatham Hedging Advisors. If you are not an experienced user of the derivatives markets, capable of making independent trading decisions, then you should not rely solely on this communication in making trading decisions. All rights reserved. 19-0104

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