- LPL Market Signals Podcast. In the latest episode of the Market Signals Podcast, listen to Equity Strategist & Portfolio Manager Jeff Buchbinder and Chief Investment Strategist John Lynch discuss Fed Chair Jerome Powell’s speech at the annual meeting of the National Association for Business Economics, as well as some of the factors pointing to continued strength in the economy. Market Signals by LPL Financial is now available on iTunes, Google Play and Spotify. Please join our discussion on social via #LPLMarketSignals.
- Producer Prices rebound. After softening over the summer, September saw the Producer Price Index-a measure of the prices businesses receive for their goods and services-increase by 0.2% month over month. Despite the recent softness, prices at the producer level have been ticking higher since early-2016, though most of the increases have been absorbed by businesses instead of being passed along to consumers thus far. The overall trend generally aligns with other inflation data, such as the Personal Consumption Expenditures Index, all of which support the Federal Reserve’s plan to continue its gradual rate-hike campaign.
- Mnuchin wants currency to be part of trade deal. With China’s currency, the yuan, down significantly this year, U.S. Treasury Secretary Steve Mnuchin indicated that currency has to be part of any trade deal with China. Mnuchin did not specifically suggest officials were manipulating the currency and acknowledged that multiple drivers are behind the yuan’s fall as the government looks to protect the economy amid decelerating growth and increasing tariffs on exports to the U.S. However, the comments come as the yuan, which is pegged to the U.S. dollar, was set at its lowest daily reference rate in over a year. Despite the yuan’s recent weakness, it remains relatively strong versus other currencies given its peg to the strengthening dollar.
- Light at the end of the Brexit tunnel; Italy stands pat on budget. According to the Wall Street Journal, UK and European Union negotiators have addressed longstanding issues over Northern Ireland. Specifically, avoiding the emergence of an official border on the island following a formal exit from the EU, and how the agreement should be enforced. Though not a done deal, both sides expect an agreement could be ready in time for EU summit next week. Meanwhile, Italian bonds resumed their selloff with 10-year yields hitting multi-year highs as government officials intend to move forward with a 2.4% budget deficit plan-much higher than the 2.0% agreed to by the previous administration-in the face of pushback from the EU, the Bank of Italy, and country’s budget office. While the UK appears to be on a tentative path to separation from the EU, the process is far from over; and the upheaval in Italy is another example of the political and structural concerns that support our cautious outlook on foreign developed markets.
Monitoring the Week Ahead
- CPI Report (Sep)
- Initial Jobless Claims (Oct. 6)
- China Trade Balance (Sep)
- China Imports/Exports Data (Sep)
- Import Price Index (MoM, Sep)
- Export Price Index (MoM, Sep)
- Eurozone Industrial Production (Aug)
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