Daily Market Color August 23, 2018Powell Set to Speak at Jackson Hole as US-China Tariffs Build Stocks Slip with Tariffs, Political Drama US equity markets trended lower today as a fresh round of tariffs ($16 billion) between the US and China were officially enacted despite ongoing trade talks between the two nations. The geopolitical tensions added to the ongoing legal cloud hanging over Washington and drove major indices 0.1%-0.3% lower on the day. US Treasurys held within a tight range for the majority of the session, and yields/swap rates finished 1-3bps higher across the curve in a bear-steepening pattern. The US dollar gained 0.6% against major currencies, partially driven by yesterday’s releases of the latest FOMC minutes, which supported the expectation for a rate hike at the September meeting. Crude oil futures retraced some of the 3% rally during yesterday’s session, as the trade threat between US-China threatens to reduce demand. Jerome at Jackson Hole Tomorrow morning financial markets will pay close attention to the speech from Fed Chair Jerome Powell at the economic symposium in Jackson Hole, Wyoming. The annual event is attended by central bankers from across the globe where monetary policy issues in the US and around the world are front and center. Major central banks are currently considering how (and whether) to reduce monetary stimulus in the wake of uncertainties related to the ongoing trade wars between several of the world’s strongest economies and persistent struggles in emerging markets and the risk of contagion. It will be Powell’s first event as Fed Chair and it remains to be seen how much, if any at all, new guidance he will provide as it relates to the future direction of US interest rates, especially amid the current backdrop where the Fed’s recent actions have drawn criticism from the sitting President. Jobless Claims Fall Key domestic economic data releases were kicked off with a report from the Labor Department that showed initial jobless claims in the US holding near historically low levels amid the backdrop of a strong economy and a tight labor market. The number of new claims for the week ended August 18th decreased 2,000 from the previous week’s revised level to a seasonally adjusted 210,000 (215,000 estimated). The four-week moving average of claims fell by 1,750 to 213,750 remaining near 50 year lows. Also detailed in the report, the number of continuing claims decreased by 2,000 to 1.727 million for the week ended August 11th, from the 8,000 upwardly revised level of 1.729 million. New Home Sales Drop Unexpectedly As it relates to new home sales for July, a 1.7% MoM decline to a seasonally adjusted 627,000 pace was reported today. The figure fell below median forecasts of a 675,000 rate, as purchases tumbled most significantly in the Northeast region (-52.3%), with the South also decline a more modest (-3.3%). The Northeast recorded only 21,000 new home sales the lowest in nearly three years. The Midwest and West posted gains of +9.9% and 10.9% respectively. New homes available for sale climbed to 309,000 in July – the highest level in more than 9 years, and the outstanding inventory rose to a 5.9-month supply. Also detailed in the data, the median new home sales price increased to $328,700, a 1.8% YoY gain.