Prior Week Summary
In a busy week on the geopolitical front, Presidents Trump and Xi agreed to resume trade negotiations at the conclusion of their highly-anticipated meeting on the sidelines of the G-20 summit this weekend, ending a near two-month impasse. The U.S. agreed to ease restrictions on Chinese telecommunications giant, Huawei, and hold back from levying additional tariffs on Chinese goods. In exchange, the Chinese government has agreed to purchase an unspecified quantity of U.S. agricultural products. Speaking on the meeting, President Xi reiterated China’s willingness to negotiate saying, “China is sincere about continuing negotiations with the United States… but negotiations should be equal and show mutual respect.” Additionally, President Trump met with North Korean leader Kim Jong Un at an impromptu meeting at the DMZ, the first meeting between the two leaders since talks broke down at the Hanoi Summit in late February. After an hour-long meeting, Trump and Un agreed to resume denuclearization negotiations, although a timeline for a deal remains unclear.
On the economic data front, investors were largely disappointed as new home sales, durable goods orders, wholesale inventories, and consumer spending all fell below analyst expectations. The third estimate for first-quarter GDP held steady at 3.1%, accelerating from the 2.2% pace seen in the fourth-quarter of 2018.
The Look Forward
In a holiday-shortened week, market participants will be looking forward to the release of updated figures on the ISM Manufacturing Index, construction spending, factory orders, and durable goods orders, among others. Notably, Friday brings the release of the June non-farm payroll report. After a disappointing May jobs report that saw the addition of 75,000 jobs, consensus estimates are calling for 160,000 jobs in June. U.S. markets are closed on Thursday for the Fourth of July holiday.
Market Implied Policy Path (Overnight Indexed Swap Rates)
Fixed Income Snapshot
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