Many investors had been looking toward the Group of 20 summits later this month for more definitive signs of the direction of trade talks between the United States and China, giving the Fed a clearer picture.
Those gains came on the heels of a selloff in May of nearly 7% in the S&P, largely fuelled by investor concerns that trade wars were escalating, slowing the economy and putting it at risk of falling into a recession. “The market has somehow convinced themselves that we are in an easing cycle. I am not sure how we got so far ahead of ourselves,” said Art Hogan, chief market strategist at National Securities in New York.
Many investors had been looking toward the Group of 20 summits later this month for more definitive signs of the direction of trade talks between the United States and China, giving the Fed a clearer picture on whether to take action on rates at the July meeting. According to CME’s FedWatch tool, money market traders are pricing in an 88.4% chance of a rate cut of at least a quarter of a percentage point in July.
Economic data this week was a mixed bag, with retail sales topping expectations and halting a tide of weak indicators, including the payrolls report and readings on inflation in the form of May consumer and producer prices with implications for core personal consumption expenditures, the Fed’s favourite inflation measure.
France Dernières Nouvelles, France Actualités
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