Week in Review


Week in Review: April 16, 2018

Global markets finished up during a volatile week which saw trade tensions ease but geopolitical tensions rise. The S&P 500 ended the week up 2.0%, while developed international equities (as measured by the MSCI EAFE Index) were up 1.5% and emerging market equities moved up 0.7% (as measured by the MSCI Emerging Markets Index). Fixed income markets were mixed with the yield on the 10-year U.S. Treasury rising to 2.82%. 


Trade Deal, Not War...


Concern over an escalated trade war with China eased last week after China’s President Xi gave a speech on trade in which he noted that China would open up its financial markets, lower tariffs on automobile imports and do more to protect intellectual property. Investors were encouraged by these developments; however, the U.S. and China also began to explore actions that could improve their respective bargaining power. China floated the idea of devaluing the Yuan as a way to offset U.S. tariffs, while the U.S. is exploring the possibility of rejoining the Trans-Pacific Partnership—a twelve country trade deal that does not include China—which the Trump administration withdrew from earlier.

The Consumer Price Index (CPI) for March climbed to a 12-month high of 2.4% annual growth, but this sharp pickup was due to weak readings from 2017. Because of the inflation weakness from February to August 2017, the year-on-year comparisons over the next few months are expected to peak around midyear and then should moderate in the second half. Policy makers at the Federal Reserve are well aware of this anomaly so it should not independently change their projections. However, minutes from the Fed’s March meeting did show some proclivity towards a slightly faster pace of tightening due to a “stronger outlook for economic activity, along with their increased confidence inflation would return to 2% over the medium term.”

Geopolitical tensions escalated over the week after dozens of people were killed in a chemical attack in Syria. The U.S., along with the support from the U.K and France, responded with missile strikes against Syrian chemical weapons facilities on Friday evening in an effort to deter future chemical attacks. These tensions also contributed to volatility seen throughout the week but investors appeared to be paying more attention to the start of first quarter earnings season which kicked into gear last week. Major banks reported with a number of positive surprises. Expectations are that banks should perform well as the economy continues to grow at a steady rate, regulations soften, and tax cuts hit the bottom line.  



Market Returns (USD)

1-Week

Quarter-to-Date

Year-to-Date

1-Year

Global Equities

MSCI All Country World

1.7%

1.0%

0.0%

17.0%

S&P 500


2.0%

0.7%

-0.1%

16.3%

Dow Jones Industrial Average


1.8%

1.1%

-0.9%

21.9%

NASDAQ


-2.8%

0.6%

3.2%

23.7%

Russell 2000


2.4%

1.3%

1.3%

16.7%

MSCI EAFE

1.5%

2.0%

0.4%

17.8%

MSCI Emerging Markets

0.7%

0.0%

1.4%

24.3%

Fixed Income

ICE BofAML Municipals 1-10 Year A-AAA 

0.1%

0.0%

-0.6%

0.0%

Bloomberg Barclays Intermediate Government/Credit

-0.2%

-0.2%

-1.2%

-0.5%

Bloomberg Barclays High Yield Bond

0.8%

1.1%

0.2%

4.5%

JPMorgan GBI Emerging Markets Global Diversified

-0.1%

-0.7%

3.8%

11.6%

Market Levels

Friday

Week Ago

Year End

Year Ago

S&P 500


2,656.30

2,640.87

2,673.61

2,328.95

Dow Jones Industrial Average

24,360.14

24,103.11

24,719.22

20,453.25

10-Year U.S. Treasury Yield (Constant Maturity)


2.82%

2.74%

2.40%

2.24%

Gold ($/oz)

$1,346.20

$1,333.03

$1,302.80

$1,287.92

Crude Oil ($/barrel)

$67.39

$64.94

$60.27

$54.66

U.S. Dollar / Euro ($/)

1.23

1.23

1.20

1.06

U.S Dollar / British Pound ($/£)

1.42

1.41

1.35

1.25

Japanese Yen / U.S. Dollar (¥/$)

107.35

106.93

112.69

109.09