Tarriffs Dominate the Economic Landscape

Up until last week, markets had priced in some kind of US-China trade agreement boosting the economy. The recent breakdown in talks, renewed tariff threats and potential escalation has caused major market volatility. Daily updates from both sides on the status of negotiations are drowning out the regular economic reports that typically set the agenda (unemployment, CPI, manufacturing indices, etc). The 10 year T dropped to 2.36% yesterday, it is testing a key technical lower level. Today’s report that China’s economic data has weakened before the implementation of tariffs reignited the “global slowdown” narrative as Europe also is stagnating. The Fed Funds market indicates a 70% chance of a rate cut this year.
By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

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