CREDIT AND MARKET STRATEGY
MUNICIPAL MARKET WEEKLY
October 15, 2019
Global Markets: Rates Sell-Off and Equities Gain on US-China Temporary Trade Truce and Potential Brexit Deal
+ Markets were in risk-on mode, heavily influenced by a potential de-escalation of the US-China trade war and progress towards a Brexit deal. Meanwhile, Trump impeachment evidence gathering by the House continued apace, Turkey made incursions into Syria after Trump pulled US troops out, and PG&E whiffed its California power outages
+ China on Friday agreed to buy more US farm goods in exchange for US suspending tariffs originally scheduled for today
+ UK PM Johnson and Irish Premier Leo Varadkar had constructive talks on Friday where Varadkar said he believed a Brexit deal is possible by Oct 31
+ The favorable trade and Brexit news caused an equity rally and global rates sell-off Thurs / Friday. The 3m10yr Treasury curve steepened and turned...
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SAMUEL A. RAMIREZ & COMPANY, INC.
QUARTERLY MACROECONOMIC OUTLOOK
FINANCIAL STRATEGIES GROUP – 3rd QUARTER 2019
Please find attached Ramirez & Co.’s Quarterly Macroeconomic Outlook. In our report, we continue to monitor the US economy, global events and the Fed’s outlook on the economy and rates:
- Despite numerous concerns and pessimism, the US economy remains healthy. The Fed expects GDP growth in the second quarter to be slightly below its potential of 1.9%. Inflation expectations decline and move away from the Fed’s 2% target. The labor market stays robust.
- Trade, politics, fiscal policy, private and public sector debt, fully valued markets, and slowing economies across the globe pose challenges.
- The markets see high likelihood of significant declines in the Fed Funds rate, with the bulk of estimates suggesting a drop of 25-75 bps by the end of 2019. Median primary dealer expectations are flat and Fed economists split on future expectations. By contrast, the EU and Japan wade deeper into negative rate policies.
Members of our Financial Strategies Group, Niso Abuaf, Konstantin Semyonov and Duncan Sinclair, would be happy to discuss further any of the material with you.
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