Mixed Data, Short Week
Prior Week Summary
U.S. equity markets moved broadly higher last week, largely buoyed by President Trump’s signing of the government spending bill, as well as U.S.-China trade negotiation optimism. After a bruising battle between President Trump and Congressional leaders over funding for a southern border wall, a government spending bill was finalized Friday, funding the U.S. government through September. The fight for border wall funding continues, however, as President Trump declared a national emergency on Friday, attempting to redirect approximately $7 billion in government funds toward the construction of a border wall without Congressional approval.
U.S. and Chinese officials met in Beijing last week as the two countries work to reach an agreement before a 25% tariff is levied on $200 billion of Chinese goods at the start of next month. Much to the relief of many market participants, President Trump indicated he would consider extending the March 1st deadline up to 60 days if trade negotiations were close to completion. Negotiations will continue in Washington this week.
Economic data released last week sent mixed signals. Retail sales and industrial production numbers fell below analyst expectations, but updated figures on consumer sentiment and manufacturing surpassed consensus estimates. Inflation remained muted, as consumer prices increased 1.6% year-over-year, falling below the Federal Reserve’s 2% target.
The Look Forward
While economic data is light for this week, market participants will have their eyes on Washington awaiting developments around the national emergency declaration. Additionally, $45 billion in 3-month Treasury Bills, $39 billion in 6-month Treasury Bills and $8 billion in 30-year TIPS are going to auction.
Market Implied Policy Path (Overnight Indexed Swap Rates)
Fixed Income Snapshot
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