Considering various crucial economic indicators, it appears inflation will likely hold steady at a moderate rate. In the first quarter, US GDP growth surged to a robust 3.2% increase, while the labor market expanded significantly in April. This year, the expansion is set to become the longest recorded in US history. Such statistics indicate that inflation should stabilize, if not rise. Yet, for reasons not entirely understood, price pressures have remained subdued and may continue to slow in the coming months.
China’s state media diminishes expectations for renewed trade talks with the US: Bloomberg
Is inflation in the US too low? According to Fed officials, it is: NY Times
Fed official states: the inflation-unemployment link ‘has broken down’: Reuters
Survey reveals economists believe US recession risk has increased: Reuters
Euro-area core inflation revised upward to its highest rate since 2017: Bloomberg
US jobless claims dropped last week, remaining near a 50-year low: MW
Philly Fed Manufacturing Index surges to a four-month high in May: MW
US housing starts rose more than anticipated in April, though one-year trend remains negative:
The ongoing trade conflict between the US and China shows no signs of resolution, leading to uncertainty about the future of US equities. Nevertheless, strong gains are reported across major US equity factors this year, based on a selection of exchange-traded funds.
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Republican lawmakers question Trump’s Iran policy: The Hill
Alabama enacts law criminalizing nearly all abortions: CBS
Trump bans US firms from utilizing technology from China’s Huawei: CNN
US suspends all flights to Venezuela: Fox
Trump postpones new tariffs on US car imports: WSJ
Trump’s tariffs may slightly increase US inflation: WSJ
US retail spending unexpectedly declined in April: Bloomberg
GDPNow Q2 growth forecast for the US drops to sluggish 1.1% increase: Atlanta Fed
Home builder sentiment in the US rises to a seven-month high for May: MW
NY Fed Manufacturing Index rebounds to a six-month high in May: NY Fed
Business inflation expectations tick up to 2.0% for May: Atlanta Fed
US industrial output’s year-on-year change slows to a 0.9% increase in April:
This shift in sentiment could be a response to the intensifying US-China trade conflict, or perhaps a cautious reaction to the prior surge in global equity markets earlier in 2019, which was undermined by escalating trade tensions. Regardless of the cause, yields on essential Treasury maturities are on a downward trend and this decline seems set to persist for the foreseeable future.
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US birth rates have plummeted to a 32-year low in 2018: WSJ
Iran has officially abandoned parts of the 2015 nuclear agreement: CNBC
The US has ordered a partial evacuation of its embassy in Baghdad: NBC
China’s retail sales growth has fallen to a 16-year low in April: Reuters
Are Trump’s China tariffs a final strategy or just a negotiating tool? NY Times
Germany’s economy rebounded in the first quarter: Reuters
Italy’s fiscal deficit raises concerns in European markets… again: Bloomberg
US import price inflation increased less than projected in April: Reuters
US Small Business Optimism Index climbed to a four-month high in April: NFIB
The escalating trade conflict between the US and China represents a wild card with uncertain economic implications. Even before accounting for this risk, forecasts indicate that the US economy is likely to experience slower growth in the second quarter, according to recent estimates.
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The US plans to impose tariffs on nearly all Chinese imports: Bloomberg
China plans to retaliate against US tariffs by imposing new levies on imports: WSJ
US stock futures stabilize following a sharp decline on Monday: CNBC
Will China divest from its considerable US Treasury holdings? CNBC
The White House is considering military options against Iran: NY Times
North Korea demands the return of a ship seized by the US: Reuters
NY Fed president: central banks must prepare for sluggish growth: Bloomberg
Eurozone industrial output fell again in March: Reuters
The 10-year-3-month Treasury yield spread inverted on Monday: MW
Investor sentiment has shifted to a risk-off approach due to increasing US-China trade tensions, resulting in losses across various financial markets last week. The only exception has been for high-grade government and corporate bonds, which have shown resilience according to a selection of exchange-traded funds representing major asset classes.
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China asserts it will ‘never yield to external pressures’ in trade discussions: Reuters
The US-China trade conflict is anticipated to persist for decades: NY Times
The White House’s economic advisor states: ‘both parties will bear consequences’ in the US-China trade war: CNBC
Experts outline various potential methods through which China may retaliate against US tariffs: CNBC
Saudi Arabian oil tankers attacked in the Persian Gulf: Reuters
US job growth among the smallest businesses has dropped to an 8-year low due to a tight labor market: WSJ
US consumer inflation’s year-long trend remains stable, hovering around 2% in April:
In summary, the economic landscape remains uncertain with various challenges, particularly concerning inflation and trade tensions. As indicators suggest a potential stabilization, the unpredictability of factors such as international trade and domestic policies will continue to shape the market’s trajectory. Ongoing monitoring of economic developments is essential for businesses and investors navigating this complex environment.
