Markets are muted ahead of a significant weekend featuring high-level trade discussions between the world\u2019s two largest economies. And just as leaders from Washington and Beijing gear up for their Geneva meeting to carve a path forward on the heels of the US and UK coming to an accord, President Trump remarked that many other negotiations are nearing completion. But the morning bullishness in response to the Head of State\u2019s optimism was temporary, as investors realize the pivotal impacts of the China talks and the crucial short-term effects on S&P 500 earnings expectations. Meanwhile, the economic calendar was quiet with a few Fed speakers pointing to uncertainty on price pressures, employment conditions and growth overall while also discussing the importance of the central bank\u2019s independence and the lingering influence of the COVID-19 pandemic on the economy. Participants are responding to the developments without much conviction as asset prices shift modestly. Folks are trimming equity holdings in most sectors and reducing exposure to the greenback in favor of Treasuries across the curve, commodity futures and forecast contracts.<\/p>\n\n\n\n
Fed Speakers Opine on Economy and Role of the Central Bank<\/strong><\/p>\n\n\n\n With the quiet period during the days leading up to this week\u2019s Federal Reserve meeting over, policymakers were out in force this morning, providing insights into the economy and the relationship of the central bank and the executive branch. Here are a few highlights:<\/p>\n\n\n\n Binary Weekend<\/strong><\/p>\n\n\n\n This weekend\u2019s developments will probably be binary for markets but don\u2019t expect a quick resolution to US-China trade tensions just yet. I\u2019m expecting many ups and downs going forward as Washington and Beijing make attempts to meet in the middle while also looking to secure their own economic interests. Trump 1.0 was an example and many of those disagreements remain unresolved today, almost a decade later. Meanwhile, inking some agreements with other foreign partners in addition to the UK would put pressure on the Chinese to play ball with the US Commander in Chief. For now, however, all eyes are on Geneva, and heightened confrontations are likely to weigh on equities in the short-term, but rising collaboration would serve to bolster enthusiasm. <\/p>\n\n\n\n International Roundup<\/strong><\/p>\n\n\n\n China Turns to Asian Trading Partners<\/strong><\/p>\n\n\n\n China\u2019s trade surplus dropped from $102.6 billion in March to $96.2 billion last month, beating the median projection of $89 billion. Imports shrank 0.2% year over year (y\/y), better than the expectation for a 5.9% dip and March\u2019s 4.3% fall. Regarding exports, volume growth moderated from 12.4% y\/y in March to 8.1% last month but was stronger than the consensus estimate of 1.9%. With US tariffs pressured orders for Beijing’s products, exports for American buyers fell 21% y\/y, but the world\u2019s second largest economy was able to find new markets, with shipments to other Asian countries growing. The recent overall decline comes after a 9.1% gain in China\u2019s exports to the US in February, which is commonly attributed to importers rushing to build inventory before levies went into effect.<\/p>\n\n\n\n Japan Consumer Spending Exceeds Expectations<\/strong><\/p>\n\n\n\n Household spending in Japan was stronger than expectations in March, but wage growth fell beneath estimates. Consumer outlays climbed 0.4% month over month (m\/m) and 2.1% y\/y compared to projections calling for a monthly drop of 0.5% and a small 0.2% gain on the annualized figure. The m\/m metric weakened from 3.5% in February, but the recent y\/y result was a reversal from the prior month\u2019s 0.5% decline.<\/p>\n\n\n\n Overall wages, however, were up only 2.1% in March, falling below both the estimate of 2.3% and February\u2019s 2.7% gain.<\/p>\n\n\n\n Canada\u2019s Unemployment Rate Moves Higher<\/strong><\/p>\n\n\n\n Canada\u2019s number of working individuals barely expanded in April and an uptick in its labor force caused the country\u2019s unemployment rate to increase from 6.7% to 6.9%, which exceeded the consensus forecast of 6.8% and was the highest level since January 2017. Total full-time workers increased by 31,500 following a drop of 62,000 in March. Conversely, the part-time segment contracted by 24,200 after climbing 29,500 in the preceding month. The average hourly wage gain of 3.5% year over year for permanent employees was unchanged from March. The recent national election contributed to a payroll bump in the public administration category. Real estate, finance, insurance and the leasing categories also added positions. The cyclical manufacturing and wholesale\/retail sectors reduced rosters by a whopping 57,400 as the trade war with the US weighs on employment conditions and economic activity. Odds for a cut at the Bank of Canada\u2019s June meeting rose because of the weak performance.<\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" Markets are muted ahead of a significant weekend featuring high-level trade discussions between the world\u2019s two largest economies<\/p>\n","protected":false},"author":903,"featured_media":217555,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[12711,18,6,8,9,26,3],"tags":[14768,7590,19770,18684,19769],"contributors-categories":[13576],"class_list":{"0":"post-223663","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-ibkr-economic-landscape","8":"category-macro","9":"category-north-america","10":"category-region","11":"category-securities","12":"category-text-articles","13":"category-traders-insight","14":"tag-economic-uncertainty","15":"tag-investor-sentiment","16":"tag-market-hesitation","17":"tag-tariff-policy","18":"tag-us-china-trade-talks","19":"contributors-categories-interactive-brokers"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"\n\n