Prior Week Summary
Despite ongoing worries of a global economic slowdown and the continued U.S. government shutdown, U.S. equity markets rose for the fourth straight week, largely buoyed by a perceived breakthrough in U.S.-China trade negotiations, solid production data and continued calls for patience from Fed officials. Market participants began the week digesting Chinese trade data that saw exports and imports drop 4.4% and 7.6% respectively, but ended the week energized by reports that Beijing offered to import over $1 trillion worth of U.S. goods over the next six years during trade negotiations last week. Additionally, in an attempt to combat slowing economic growth at home, China injected 560 billion yuan into the market Wednesday, easing investor worries about China’s worsening economic outlook.
The Empire manufacturing survey fell far below analyst expectations on Monday but was countered late in the week by a much better-than-expected reading from the Philadelphia Fed’s Business Outlook survey. The survey suggested that the manufacturing sector decline may have been overstated. Lastly, a number of Federal Reserve officials, including the Esther George, emphasized the need to exercise patience in regards to monetary policy, reiterating similar sentiment offered last week by Federal Reserve Chairman Jerome Powell.
The Look Forward
On the holiday-shortened week, market participants are awaiting data on existing home sales, new home sales, durable goods orders and retail sales.
Market Implied Policy Path (Overnight Indexed Swap Rates)
Fixed Income Snapshot
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