Description: The article is about 53 bank login. The passage mainly introduces some big news happened in the last week. It is a mixed week of economic news and market returns,however trade dominated headlines throughout the week.
I’m director of asset allocation at Fifth Third Bank in Cleveland,we had a mixed week of economic news and market returns last week,first quarter earnings season essentially came to a close and trade dominated the headlines throughout the week.
Major US equity indexes,including the S&P 500 and the Dow Jones Industrial Average posted modest declines. Sectors were mixed as bond proxies,technology and financials underperformed.
Materials,energy industrials were well,small caps were the clear winner of the week with the Russell 2000 hitting fresh highs. Better leverage to the u.s. administration’s tax overhaul,D regulatory push,dollar strength and relative insulation to trade tensions were cited as explanations behind the outperformance.
US Treasuries were weaker as ten-year yields pushed back above 3%. The dollar index was up over 1 percent,it is the strongest week since 2016. West Texas Intermediate crude oil gained 0.8 percent closing Friday near 71 dollars per barrel. A backup in bond yields and a renewed dollar rebound were too intertwined overhangs on global risk sentiment last week.
The bond yield back up saw the ten-year US Treasury note rise to nearly three point one three percent,it is the highest yield since July 2011 before ending the week at three point zero six percent. A number of factors were cited for higher yields including push back against peak earnings concerns,the ongoing oil rally given the accompanying inflation implications and fiscal stimulus and the accompanying deficit dynamics.
Higher yields have helped explain the move in the dollar index which has jumped nearly four point five percent in the last month. Dollar upside has been driven by a combination of elevated shore positioning and the better economic data from the US.
Higher yields and a stronger dollar pressured emerging market assets last week,the MSCI Emerging Markets Index fell more than one point seven percent,an emerging market currencies had their largest weekly loss since November 2016.
Trade dominated headlines throughout the week. China said reports that they accepted the u.s. demand to narrow the trade gap were untrue. Earlier reports said China offered to cut its trade surplus with the US by two hundred billion dollars a year,China said that talks remain constructive.
Neither country wins in a true trade war and both sides are heavily incented to come to a rational solution. Headline risk will likely continue as the negotiation process unfolds over the next several weeks and months. First quarter 2018 earnings season is essentially complete with 93 percent of the S&P 500 having now reported.
The blended growth rate for q1 S&P 500 EPS now stands at twenty four point five percent up from the eleven point three percent expected at the start of the quarter,it is the best since q3 2011.
Tax reform was cited as a driver,it was also pointed out that firms expressed optimism that trade tensions would ultimately be resolved and stressed the importance of a free trade environment. However managers flag rising wages,rising commodity prices and rising logistics costs as potential headwinds for future earnings.
In a week of relatively limited economic news,the New York Fed’s Empire State manufacturing index rose to 20.1 in May,it is the strongest since the start of 2012 versus a prior reading of fifteen point eight and for expectations for a drop to fifteen point zero.
The survey is one of the earliest snapshots of factory and economic activity for May,it pointed to ongoing robust activity. Additionally,US retail sales increased in line with forecasts,rising 0.3 percent in April after a 0.8% advance in the prior month that was stronger than initially reported.
The results corroborate expectations that consumer spending will rebound from first quarter weakness. This week we will watch for updates from the ongoing us-china trade negotiations,additionally South Korean president Moon jae-in plans to visit Washington and meets with President Trump in advance of the scheduled us North Korea summit with Kim jong-un scheduled for next month.
The Federal Reserve releases minutes of its May meeting this week,where rates were left unchanged. The feds take on inflation and the yield curve will be watched closely by investors,finally minutes from the most recent European Central Bank meeting will be made public on Thursday.