WEEKLY CAPITAL MARKET HIGHLIGHTS:
- Among equities, the emerging markets were the big winner in the week, led by Russia, India, and China. Japanese equities were up almost 2% on the week. Europe was mixed, with Germany also up nearly 2%, but Italy, Spain, and the UK were up less than 1%. US large cap equities were up about 1%, whereas small caps were essentially flat on the week.
- Treasury yields jump. Treasury yields moved higher by 9-10 basis points across the curve this week, with the yield on the 10-Year Note flirting with the 3.0% level. Most of the increase came early in the week, as Japanese JGB’s also sold off on reports of a change being discussed in the Bank of Japan’s quantitative easing program.
- The US Dollar Index ended a relatively volatile week largely unchanged. A modest rally on Monday and Tuesday was reversed on Wednesday on news of a “truce” with the EU on trade. It rallied again on Thursday, mostly against the euro, as the ECB left rates unchanged.
- Crude Oil was up slightly on the week and is now up just slightly more than 15% for the year. Tensions with Iran and a labor strike on several North Sea platforms pushed prices higher, even as a strike in Norway was settled last Friday.
- Among other economic data released this week: Durable goods orders were up 1.0% in June, but well below the expected increase of 3.7%. The US goods trade deficit widened by 5.5% in June, as exports fell by 1.5% and imports rose by 0.6%. US consumer sentiment remains high, despite falling to a six-month low in June. US GDP hits 4.1%, best in nearly four years. The initial estimate for growth in the second quarter came in at 4.1%, driven by higher consumer and government spending. The final estimate for first quarter GDP was revised higher from 2.0 to 2.2%. The trade gap narrowed in the second quarter, but primarily due to foreign buyers increasing purchases before the Administration’s new tariffs take effect later this year.
Click here to download the complete weekly report: EWMWeeklyReview 7.27.18