Market Update | June 15, 2018

Macro View

Daily Insights

  • U.S. rolls out tariffs on Chinese goods. President Trump approved a list of more than 1,100 items expected to generate ~$50 billion in taxes on Chinese imports, with an additional $16 billion in goods still under review. Collection is slated to begin three weeks from today. In the U.S.’ defense, the President stated that the U.S. can “no longer tolerate losing our technology and intellectual property through unfair economic practices.” He further indicated that the current state of U.S.-China trade remains unfair and unsustainable, and the U.S. would impose additional tariffs if China retaliates with levies of its own. Global equity markets retreated overnight on the news, but despite the rekindling of trade tensions between two of the world’s largest economies, many remain skeptical (as we do) that tensions will escalate to an all-out trade war. Rather, as we’ve stated before, the value of the tariffs suggests this is another negotiating tactic, but the situation bears monitoring to be sure.
  • BOJ rounds out week of monetary policy meetings. No surprises in this one as members voted overwhelmingly to maintain the status quo, with short term rates in negative territory, long term rates near zero, and the asset purchase plan continuing unabated. Looking ahead, Bank of Japan (BOJ) members expect inflation to continue its recent, though unstable, uptrend toward 2% over the medium-to-long term; however, BOJ Governor Kuroda acknowledged that inflation remains sluggish and noted that deeper discussions will be held prior to its July meeting in an effort to help reinforce the trend. Overall, traders took the news as positive, pushing the Nikkei up 0.5% overnight to end the week in positive territory, one of the few major equity indexes in Asia to finish higher.

Monitoring the Week Ahead

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