Key Updates:
- Secretary of State Pompeo meets with a senior North Korean official in New York: CBS
- Trump is poised to implement steel and aluminum tariffs on Europe: Reuters
- Federal Reserve moves to relax the Volcker rule for major banks: The Hill
- Revision of US Q1 GDP growth sees a decrease to 2.2% from 2.3%: MarketWatch
- Increase in energy prices leads to a significant spike in Eurozone inflation for May: AP
- Fed’s Beige Book indicates moderate growth in the US economy driven by manufacturing: WSJ
- Economists have raised their forecasts for US Q2 GDP growth: Bloomberg
- US trade deficit decreased in April to its lowest level in six months: Bloomberg
- ADP reports a growth of 178,000 private-sector jobs in May: USA Today
Italy is facing a political crisis that resulted in a noticeable shift in market sentiment yesterday. As a consequence, US Treasury yields experienced a significant drop, with the 2-year rate falling to 2.32%—the lowest it has been in over a month—and the benchmark 10-year yield decreasing to a two-month low of 2.77%.
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Highlights:
- Italy’s political instability could pose global economic risks: NY Times
- Asian markets continue to decline following a sharp fall in US stocks: Reuters
- Trump reinforces plans for trade tariffs against China: New York Mag
- China vows to counter “reckless” US trade threats: Reuters
- US home prices recorded a solid increase of 6.8% in March compared to last year: USA Today
- Texas manufacturing activity surged in May, reaching a 12-year peak: Bond Buyer
- US Consumer Confidence Index climbed in May, nearing an 18-year high: MarketWatch
The US stock market has experienced significant fluctuations throughout 2018. However, this increase in volatility has not undermined the momentum that continues to lead US equity factors, according to various proxy ETFs.
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Recent Developments:
- North Korea dispatches a high-ranking aide to the US for pre-summit discussions: Bloomberg
- Trump urges his team to proceed with the US-North Korea summit plans: CNN
- Russia warns that reports of US troops in Poland could provoke a “counteraction”: Newsweek
- The political situation in Italy has sparked heavy selling in European markets: Reuters
- OECD head states that global growth still requires fiscal-policy support: CNBC
- NY Fed’s nowcast for Q2 GDP growth has adjusted to a solid 3.01% increase: NY Fed
- Oil prices are on track for their longest streak of losses since February: Bloomberg
- German 10-year government bond yield has reached a new low for 2018:
Today marks Memorial Day in the US, a solemn occasion to remember the brave men and women of the military who sacrificed their lives in service to their country. It’s also a day to acknowledge the valor of those who returned home. Consider supporting your favored charity that assists veterans, such as:
Disabled American Veterans
Paralyzed Veterans of America
To all American veterans, we express our deepest gratitude for your service!
Real estate investment trusts (REITs) have demonstrated the most robust performance among the primary asset classes in the past week, according to a selection of exchange-traded products.
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Latest News:
- South Korea is advocating for further discussions with the North; US is preparing for a Trump-Kim meeting: Reuters
- Italy is in turmoil as calls for the impeachment of the president escalate: BBC
- Italy designates a former IMF official as interim prime minister: Reuters
- Chinese vessels confront US Navy ships near disputed territories in the South China Sea: Time
- A summit between China and Iran is scheduled to mitigate uncertainties surrounding the nuclear deal: Reuters
- Orders for durable goods in the US fell in April, chiefly due to a decline in aircraft orders: MW
- US consumer sentiment remained stable in May at a high level: WSJ
- Oil prices have dropped amid rising supply concerns: MW
- World trade volume exhibits a significant slowdown in annual growth, recording only 2.1% in March: CPB
By Paul Tucker
Review via Reuters Breakingviews
How much influence should central bankers possess within a democracy? This is the central theme Paul Tucker explores in “Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State.” The role of central bankers is increasingly intersecting with heavily political decisions regarding government financing and income distribution, despite their lack of electoral legitimacy. Simultaneously, discontent among Western voters has pushed them toward demagogues, jeopardizing the independence of central banks.
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Is Fertility a Leading Economic Indicator?
Kasey Buckles (University of Notre Dame), et al.
March 28, 2018
Numerous studies reveal that aggregate fertility is pro-cyclical throughout the business cycle. This paper takes a unique approach by using data from over 100 million births to focus on within-year variations in fertility. Our analysis shows that for recent recessions in the United States, the growth rate of conceptions begins to decline several quarters before economic downturns. These findings indicate that fertility behaviors are more sensitive and forward-looking in response to short-term economic expectations than previously understood.
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