Weekly Economic Update: August 26th, 2019
• Yield on the two-year Treasury note briefly inverted with the ten-year note again on Thursday before finishing the week up by six basis points at 1.54%. The ten-year Treasury note finished the week down three basis points at 1.54% leaving no spread to the two-year note.
• Stocks rallied early in the week before being routed on Friday when news broke that China will impose tariffs on an additional $75 billion worth of American goods. President Trump responded by stating that his administration will increase tariffs on $550 billion of Chinese goods as ongoing trade banter continues to stir volatility into markets.
• Mixed messages were received at the annual gathering of central bankers in Jackson Hole, Wyoming on Friday. Chairman Powell pointed to strength in the economy noting a strong job market, solid consumer spending, and rising wages but also acknowledged ongoing trade uncertainties and reaffirmed that the Fed will do whatever it takes to sustain the expansion.
• Markets are pricing in a 100% probability of another rate cut at the upcoming Fed meeting on September 18th and recession fears are still looming as there is an increasing speculation of policy makers’ ability to combat the next downturn.