May to June

May 28, 2019 Chatham Financial

Prior Week Summary

Fears of a prolonged U.S./China trade war dominated market headlines last week and sent U.S. equities lower with the S&P 500 posting a drop for the third consecutive week. Deepening the divide between the two sides, the Trump administration banned U.S. companies from doing business with Chinese telecommunications giant, Huawei. The Chinese were quick to criticize the decision with Gao Feng, a spokesman for the Chinese Commerce Ministry, saying, “If the United States wants to continue trade talks, they should show sincerity and correct their wrong actions. Negotiations can only continue on the basis of equality and mutual respect.” Reports later in the week suggested that the U.S. is weighing the option of applying a similar “blacklisting” to five Chinese video-surveillance companies, citing national security concerns. While the trade-war looks set to continue, President Trump and President Xi will likely meet in June at the G-20 Summit.

Prime Minister Theresa May announced that she would resign from her role as Prime Minister on June 7th, following a failed effort to win cross-party support for her fourth Brexit proposal. May’s resignation comes the same week as the E.U. Parliament Elections where May’s Conservative Party received less than 10% of the vote, the worst showing for the Conservative Party in any election. On the U.S. economic data front, new and existing home sales and durable goods orders fell below analyst expectations, and the Markit US Manufacturing PMI fell to its lowest level since October 2009.

The Look Forward

In a light week for market-moving U.S. economic indicators, market participants are awaiting the release of updated figures on consumer spending, wholesale inventories, consumer sentiment and first-quarter GDP.

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.



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