Progress in U.S.-China Trade Negotiations

April 8, 2019 Chatham Financial

Prior Week Summary

U.S. equity markets continued to move higher last week, as the three major U.S. indices reached 6-month highs on the back of solid domestic economic data and perceived progress in U.S.-China trade negotiations. While retail sales numbers disappointed early in the week, a host of economic releases including the ISM Manufacturing Index and the March jobs report topped analyst estimates. The U.K. Parliament rejected four Brexit alternatives on Monday, prompting Prime Minister Theresa May to join forces with Labour party leader Jeremy Corbyn in a bid to craft a cross-party solution that could win enough support to pass through Parliament. Attempting to avoid a no-deal Brexit, May asked the E.U. to extend the Brexit deadline beyond the current date of April 12th to June 30th. While a verdict from the E.U. has yet to be reached, any extension offer will require unanimous approval from all 27 E.U. Member States.

After meeting in Washington, U.S. and Chinese officials touted progress in trade negotiations. Reports indicated that issues related to commodity purchases are beginning to clear up, but developing an enforcement mechanism remains a key obstacle. Highlighting progress in negotiations, President Trump said, “We’ve agreed to far more than we have left to agree to. This is the granddaddy of them all.”

The Look Forward

Aside from Brexit developments, market participants will be looking forward to updated figures on inflation and consumer confidence. Additionally, the ECB meets in the middle of the week and a number of U.S. banks release first-quarter earnings.

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. 19-0093

Previous Article
Brexit Deadline Averted
Brexit Deadline Averted

Despite intensifying global growth fears, U.S. equity markets marched higher last week, buoyed by a solid s...

Next Article
Another Quarter in the Books
Another Quarter in the Books

Capping an end to one of the best quarters in recent memory, U.S. equity markets marched higher last week a...

×

Subscribe to Chatham's weekly Market Insights

First Name
Last Name
Company
!
Thank you!
Error - something went wrong!