Weekly Market Commentary





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Jeff Cox – CNBC
June Jobs Report Beats Expectations

Summary: The US added 213,000 jobs in June and more people returned to the job market. The data beat expectations and signalled strength in the labor market. Wage growth was subdued, which could keep inflation low and allow the Fed to keep interest rates lower for longer. Stocks rose on the news. 

Jason Lange – Reuters
Fed Still Sees Strong Economy

Summary: The Federal Reserve’s meeting minutes showed that members are showing signs of concern that a recession may be approaching but that the economy remains strong enough to support further rate hikes. Some members suggested that the US has reached a point of self-sufficiency where Fed policy is no longer boosting or constraining the economy. 

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Michael Martina and David Lawder – Reuters
China Counters US With Tariffs on $34 Billion of Goods

Summary: China responded to the US’s recent tariffs against their goods by imposing tariffs on $34 billion. Neither side has shown interest in negotiating a trade truce. Both sides have threatened additional tariffs but imposing new trade rules would likely take weeks to months to put into motion. The effects of the announcements have not yet hit consumers as many businesses have been reluctant to pass on higher prices to customers. 

Samuel Potter – Bloomberg
Slo-Mo Credit Crunch Has Already Taken Hold

Summary: Bond guru Steven Major believes that a slo-mo credit crunch is currently causing a sell-off in risky market assets. Financial conditions are beginning to tighten, but because the rise has been from historical lows the effects have not been felt as strongly in the financial markets. If conditions continue to tighten it could lead to yield compression in investment grade issues and widening spreads in high yield bonds. 

Charles Schwab Logo - Waterloo Weekly Market Commentary

Liz Ann Sonders, Jeffrey Kleintop, Brad Sorensen – Charles Schwab
Just Noise or Something More?

Summary: Trade-related volatility has risen due to the public nature of recent trade disputes. Despite trade concerns, the bull market is likely intact. The latest jobs report showed that the economy is still strengthening. However, concerns are growing that the Federal Reserve could make a policy error and cause an inversion of the yield curve.

Richard Turnill – Blackrock
Moving Up in Credit Quality

Summary: Investment grade corporate bonds typically outperform their high yield counterparts when uncertainty raises. Recently, however, that has not been the case. Yield spreads have widened versus Treasuries, putting downward pressure on prices. Additionally, issuance has rapidly escalated amid a surge in mergers and acquisitions (M&A) activity. There is less need to stretch for yield when dollar-based investors can get above-inflation returns in short-term “risk-free” debt.



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