Equity Indices Hit Record Highs as Trade Fears Take Backseat

 

Stocks, Yields Up…Again

US stocks rallied again today, pushing the DJIA and S&P 500 to new record highs as equity investors continued to look past the ongoing trade disputes.  Major indices finished with gains between 0.78%-0.98%, driven largely by strength in the tech sector.  US Treasurys experienced a slight selloff throughout the trading session, with yields/swap rates up 1-2bps across the curve and the 2-year note yield adding to its highest level in the past decade, now at 2.80%.  WTI crude oil futures reversed a portion of yesterday’s rally, declining roughly 0.5% to $70.80/barrel.  President Trump was pointed to as a potential catalyst of the downturn after this morning he tweeted at OPEC to “get prices down now”.  OPEC and other major oil producers are set to meet this Sunday in Algeria to discuss the future plan for output restriction.

 

 

Trade talks between the US and Canada seemed to fall flat today, as Canadian Foreign Minister Chrystia Freeland announced that “we discussed some tough issues today”.  One of the major sticking points on Canada’s side remains the reluctance by the US to take auto tariffs off the table.   “Why would Canada sign a trade agreement with the United States … and then have Donald Trump impose a 25 percent tariff on automobiles?” Jerry Dias, president Canada’s largest private-sector union, told reporters earlier today.  The next round of talks between US and Canadian trade officials is set for next week, bringing more doubt to the prospects of an agreement before month end.

 

 

New Low for Claims

Key economic data releases on the day displayed further strength in the labor and housing markets, contributing to the risk-on sentiment that has dominated financial markets over the past week.  The number of Americans filing for unemployment for the first time fell to a seasonally adjusted 201,000 last week – a new 49-year low.  The four-week moving average of claims also fell to the lowest level in nearly a half a century, down 2,250 to 205,750, reflective of the continued tightening in the labor market.  Separately, continuing claims fell by 55,000 to 1.645 million for the week ended September 8th.

 

 

 

Home Sales Flat in August

Adding to yesterday’s report in detailing the current housing market, a release from the National Association of Realtors displayed existing home sales remaining flat during August at a seasonally adjusted rate of 5.34 million units.  The reading effectively ended four straight months of declines, but missed expectations of 5.37 million.  Additionally, a build in inventory was recorded for the first time in the past three years – perhaps a sign that sales could rebound despite rising material costs and shortages in the labor market.