June 12, 2017 – Weekly Market Commentary



 

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Jack Ewing – New York Times
European Central Bank Meeting Focuses on “Forward Guidance”

Summary: The European Central Bank has promised to continue buying bonds at least through the end of the year but disappointed analysts who were expecting more clarity on when purchased will be tapered or halted. ECB President Mario Draghi said that the bank will not alter its benchmark interest rates until it has ended the bond buying program and will keep rates low for “an extended amount of time.”

 

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James Masters and Angela Dewan – CNN
Theresa May to Form New Government With Help of DUP

Summary: After voters delivered her party a huge blow at the polls last week British Prime Minister Theresa May has pledged to form a government with Northern Ireland’s Democratic Unionist Party (DUP). The DUP is known for pursuing a more socially conservative agenda than the May’s own party and pushed back against a “hard Brexit”. 

 

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Ingrid Melander and Michael Rose – Reuters
Macron’s Party set for Huge French Parliamentary Majority

Summary: President Emmanuel Macron’s fledgling party is set to trounce France’s traditional main parties in the parliamentary elections. Macron’s LREM party and Modem allies won nearly 32% of the vote. The huge majority will help Macron to push through the pro-business reforms which he campaigned on. 

 

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B.G. – The Economist 
Why the Fed is likely to raise rates, despite low inflation

Summary: The Fed may feel that it must hike at the June meeting in order to preserve its credibility with financial markets. When they meet this week, the FOMC will be concerned about two things. First, it must follow its mandate, keeping unemployment low and inflation within reason. Second, since the committee wants markets to continue to believe that it will do what it has said it will do, a rate hike may be in order to preserve market trust. The problem is that the Fed may have created a situation where it is forced to make policy decisions based on market guidance and not hard economic data. 

 

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Lizz Ann Sonders, Brad Sorensen, Jeffrey Kleintop
Goldilocks…or the Three Bears?

Summary: U.S. Equities continue to push higher, with volatility remaining historically low. The labor market is tight which will help to support the consumer but could limit economic and profit growth. The Schwab team believes that the bull market still has room to run. Global trade has picked up, which could boost further stock market gains, with a likely bias towards larger companies.

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