CREDIT AND MARKET STRATEGY
MUNICIPAL MARKET WEEKLY
December 2, 2019
Global Markets: Positive US-China trade news and Fed’s Powell comments drive gains on the week
• Equities gained on the week on good economic data, dovish comments from Powell, and optimistic trade sentiment, but finished off Wed’s record highs on news that Trump signed a Congressional bill supporting Hong Kong protestors, angering Beijing. The DJIA gained +0.6%, the S&P gained 1%, and the NASD rose 1.7%. Good economic data included GDP for 3Q19 beat expectations at +2.1% q/q and Core PCE gaining +2.1% q/q, only slightly missing expectations.
• Treasuries posted slight total returns on the week (+0.09% week; +7.46% YTD) as 2s30s bull flattened -5 bps on positive trade news and Fed Chair Powell’s dovish comments on Monday in Providence, RI. Powell indicated that “monetary policy is now well positioned to support a strong labor market and return inflation decisively to the Fed’s 2% target"...
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SAMUEL A. RAMIREZ & COMPANY, INC.
QUARTERLY MACROECONOMIC OUTLOOK
FINANCIAL STRATEGIES GROUP – 4th QUARTER 2019
Please find attached Ramirez & Co.’s Quarterly Macroeconomic Outlook. In our report, we continue to monitor the US economy, global events and the Fed’s outlook on the economy and rates:
- The global economy is still growing, but decelerating. The IMF slashes its global growth forecast to 3%, the Fed expects that US growth would moderate to its potential rate of around 2% minus, and Europe is stuck at 1% plus.
- US-China trade tensions and geopolitical risks seem to be the main drivers affecting sentiment, declines in global trade, business investment and manufacturing output. Though consumers are still feeling robust, they may eventually feel the pinch.
- Unlike the 2007-2009 contraction, there is not much central banks can do about our current predicament, regardless of how hard they may try. The answers will have to revolve around fiscal and trade policies. Nonetheless, the Fed, the ECB and other central banks are on a loosening policy stance, largely as insurance policies. With global assets bearing negative interest rates exceeding $15 trillion, interest rates are likely to move along a soft path – unless the global economy heats up.
Members of our Financial Strategies Group, Niso Abuaf, Konstantin Semyonov and Duncan Sinclair, would be happy to discuss further any of the material with you.
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