Prior Week Summary
U.S. equity markets ended lower last week as the escalation of the U.S./China trade dispute weighed on investor sentiment. After the U.S. increased tariffs on $200 billion of Chinese goods, China announced retaliatory tariffs ranging from 10% to 25% on $60 billion of U.S. goods beginning on June 1st. Reports on Friday afternoon suggested that the negotiations have stalled as China appears unwilling to renegotiate the concessions they reneged on earlier this month. In other trade news, the U.S. agreed to lift steel and aluminum tariffs on Canada and Mexico, a necessary step toward the ratification of the United States-Mexico-Canada Agreement. Additionally, the Trump administration announced a six-month delay on imposing automobile tariffs on the E.U. and Japan as trade negotiations are expected to continue.
Cross-party negotiations between the U.K. government and the Labour party have broken down after the two sides failed to reach a substantial compromise over how to handle Brexit. Jeremy Corbyn, Leader of the Labour Party, highlighted his party’s opposition to the proposal after the breakdown in talks saying, “I should reiterate that, without significant changes, we will continue to oppose the government’s deal as we do not believe it safeguards jobs, living standards and manufacturing industry in Britain.” Prime Minister Theresa May plans to bring her Brexit proposal to vote for a fourth time in early June, but it is unlikely to receive the required votes to pass in its current state.
The Look Forward
In a light week for economic data, market participants will get updated data on new and existing home sales, as well as durable goods orders. The Federal Reserve releases the Minutes from the latest FOMC meeting on Wednesday.
Market Implied Policy Path (Overnight Indexed Swap Rates)
Fixed Income Snapshot
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