You Can Stare at the Sky or Pick up a Hammer
Weekly Commentary, March 17th, 2017
- Equity markets were positive this week with U.S. stocks (S&P 500) up +0.28% and international stocks (EAFE) up +1.93%
- Fixed income markets were also positive with investment grade bonds (AGG) up +0.51% and high yield bonds (JNK) up +0.90%
- Federal Reserve – On Wednesday, The Fed raised rates 0.25% to a range of 0.75%-1.00%. More importantly, Yellen’s comments seemed to indicate the Fed is willing to let inflation run above 2% for a while since it has run at a sub-2% level for some time (viewed as a positive for markets), as was their new stated focus on “core inflation” which excludes food and energy, and usually runs lower as a result. Global markets rallied sharply on the news, and continued Thursday in overseas markets.
- Consumer Debt – “Data from the Federal Reserve shows that total credit card debt in the U.S. stood at $995.5 billion in December 2016, according to Bankrate. It is expected to top $1 trillion at some point in Q1'17. The all-time high for credit card debt was $1.02 trillion, set in December 2007. Due to the 2008-2009 financial crisis, the amount of credit card debt declined from $1.02 trillion to $832.0 billion in April 2011. The credit bureau TransUnion believes that a positive employment picture and rising median household income should keep debt problems at bay in 2017.” (Source: First Trust)
- Brexit Update – PM Theresa May secured two years to begin talks around Britain’s exit from the EU after an affirmative vote by Parliament that contained no amendments.
- U.S./China Trade – At his closing of the National People’s Congress, Chinese Premier Li Keqiang stated that “China does not want to escalate a trade war with the U.S. That wouldn't make our trade fairer, and that hurts both economies. China hopes that no matter what bumps this relationship may run into, we hope this relationship will continue to forge in the right direction."
- Commentary: Knowledgeable market experts couldn’t disagree more on the future direction of the risk markets.
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