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Approaching U.S trade tariff deadlines, continued uncertainty of a phase one U.S.-China trade agreement, CPI and PPI reports, the FOMC meeting and UK elections all added to a jittery start of the week. 10-year U.S. Treasury rates, unchanged at 1.84% through Tuesday after an as-expected CPI report, fell 5bps on Wednesday after the U.S. Federal Reserve bank said it would maintain the current Fed funds target rate unless there was a significant outlook change. President Trump’s announcement on Thursday that he had signed off on the trade agreement caused 10-year U.S. Treasury rates to reverse course and increase 10bps to 1.89% only to reverse course again on Friday after China confirmed there was an agreement and after a benign retail sales report pushing 10-year Treasury rates down 7bps to 1.82%. The S&P 500 index moved lower early in the week, also affected by the uncertainty surrounding the FOMC meeting and the prospects of a U.S.-China trade deal. Down 0.4% through Tuesday, the S&P 500 Index increased 1.2% the remainder of the week after the announcement of a trade agreement and a “steady-as-she-goes” policy annunciated by Fed Chairman Jerome Powell. At week’s end the S&P 500 Index increased 0.7% to 3168.8, 10-year U.S. interest rates fell 1bp to 1.82% and the U.S. dollar (as measured by the DXY index) weakened 0.5%.

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U.S. stock markets moved lower Monday and Tuesday last week following statements from President Trump threatening steel tariffs on Brazil and Argentinia, promising repercussions to France’s digital tax and allowing for the possibility of U.S-China trade negotiations dragging on through 2020. Conversely, 10-year U.S. Treasury rates moved higher on Monday after better-than-expected manufacturing data from China, then moved sharply lower on Tuesday following President Trump’s comments regarding U.S.-China trade negotiations and weaker-than-expected U.S. manufacturing data. Reports on Wednesday that a U.S.-China trade agreement was very close, all but erasing concerns raised Tuesday, and stronger-than-expected non-manufacturing data moved 10-year U.S. Treasury rates and U.S. stock markets higher. Lower-than-expected initial jobless claims on Thursday and a much-stronger-than expected employment situation report on Friday pushed U.S. stock markets and 10-year U.S. Treasury yields higher through the remainder of the week. At week’s end the S&P 500 was up 0.2% to 3145.91, 10-year U.S. Treasury rates increased 6bp to close at 1.84% and the U.S. dollar (as measured by the DXY index) weakened 0.6%.

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Supported by indications of progress on a U.S.-China trade agreement and strong U.S. economic reports (including new home sales and 2nd estimate Q3 GDP), the S&P 500 Index moved 1.4% higher through Wednesday to close at 3153.63, another all-time high. President Trump’s signing of legislation supporting Hong Kong protesters along with falling energy prices pushed U.S. stock markets slightly lower with the S&P 500 Index slipping 0.4%. At week’s end the S&P 500 was up 1% to 3140.98, 10-year U.S. Treasury rates gained 1bp to 1.78% and the U.S. dollar was unchanged (as measured by the DXY index).

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Comments by Chinese President Xi Jinping calling for increased communications between the U.S. and China, positive comments from President Trump regarding U.S.-China trade frictions and stronger-than-expected economic reports on Friday moved U.S. stock markets, 10-year U.S. Treasury rates and the U.S. dollar off their lows of the week. At week’s end the S&P 500 was down 0.3% to 3110.29, 10-year U.S. Treasury rates fell 6bps to 1.77% and the U.S. dollar strengthened (all on Friday) 0.3% (as measured by the DXY index). ).

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Renewed optimism over a U.S.-China trade agreement spurred by Trump administration comments and stronger-expected retail sales on Friday, pushed the S&P 500 Index almost a percent higher and moved 10-year U.S. Treasury rates a couple of basis points off their lows of the week. At week’s end the S&P 500 increased 0.9% to 3120.46, 10-year U.S. Treasury rates fell 11bps to 1.83% and the U.S. dollar weakened 0.4% (as measured by the DXY index).

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Stronger-than-expected U.S. economic and earnings reports – and despite increased expectations that the next rate move by the U.S. Federal Reserve bank will be a move higher – pushed the S&P 500 Index up 0.85% to an all-time high of 3093.08 while moving the 10-year U.S Treasury rate higher by 23 bps to 1.94% and strengthened the U.S. dollar by 1.2% (as measured by the DXY index).

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