Featured Market Snapshot
So far, so good
The US economy is having a solid summer so far; with a dovish Fed, more growth may need new tools. Meanwhile, Europe is feeling the first impact of the Brexit vote; China's currency continues to play a supporting role in global trade.
Wallets at the ready
Slow, steady growth spread to the consumer sector in June, with retail sales perking up right along with consumer prices. Meanwhile, Japan's election gave Shinzo Abe a historically free hand for reform, both economic and military, and China growth showed the benefits of government support.
Friday’s jobs report cheered markets; good news was perceived as good news, given broad-based belief in a still-dovish Fed. Meanwhile, the three-way tug-of-war between Italy's central bank, a preoccupied ECB and a regional Italian bank continued.
While beginning the adjustment to a changing economic and political landscape, world market liquidity appeared to hold up well, thanks to careful central bank management. Meanwhile, Puerto Rico got a much-needed break.
At what price?
Last week's markets and policymakers' reaction to the UK referendum results were about price discovery and risk control; meanwhile, US banks passed an important stress test, and Saudi Arabia seemed to endorse $50 crude.
It's not just for Brexit
The Fed, the Bank of England, the Bank of Japan and the Swiss National Bank all kept their rates unchanged, each for different reasons, but all nodding to the UK's referendum on leaving the EU -- as global bonds and the Japanese yen continued to soar. All this as the European Central Bank (ECB) got ready to add yet more stimulus.
Flight to safety in tough times
Bond yields worldwide lurched downward, at least in part due to unsettling news about global growth and the June Fed meeting. Meanwhile, US job growth remains stymied, but not for lack of demand for workers; and Saudi Arabia plans to proffer a piece of patrimony as part of a planned program of reform.
The May US job report was a disappointment, with hiring far below expectations, feeding skepticism about a June Fed rate hike. Japan's government backed away from a scheduled sales tax increase, fearing the impact on consumer spending.
The Memorial Day holiday in the U.S. marks the unofficial start of summer and that means road trips and hot dogs. A drop in temporary employment this year has eyes focused on Friday’s U.S. jobs report for signs of a summer cool down. Germany's GDP growth for the first quarter of 2016 was strong. Cuba could legalize small- and medium-sized private businesses by the end of the summer and the US dollar has recently shown renewed strength against most other currencies.
The Eurozone economy is beginning to turn in respectable aggregate growth figures, though disinflation seems to be the rule rather than the exception. The Fed held to its current rate stance, but suggested that it might hike again sooner rather than later. Meanwhile, the Bank of Japan surprised many by also deciding to hold its fire.
Japanese exports shrank in March for the 6th month in a row. Initial claims for state unemployment benefits came in well below expectations. Saudi Arabia is negotiating a $10 billion 5-year loan from a syndicate of international banks, foreshadowing bond issuance later this year.
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