by Connor Darrell CFA, Assistant
Vice President – Head of Investments
Markets
slid lower last week as concerns over trade policy remained top of mind for
investors. On Thursday, President Trump announced that the United States would
begin assessing a 5% tariff on all U.S. imports from Mexico unless the Mexican
government began taking a more active role in reducing the flow of Central
American migrants seeking asylum in the United States. The news pushed markets
into “risk-off” mode and stoked concerns that major North American supply
chains could be materially disrupted. The U.S. 10-year treasury reached its
lowest level since September of 2017, which resulted in a deeper inversion of
the yield curve and a strong week for bonds.
Watching the Economic Data
Amid all of the uncertainty permeating through markets regarding trade policy and its eventual impact on global economic growth, the Fed has continued to express its intention to remain “data dependent.” This week, markets and policymakers will have access to updated PMI manufacturing data, which has been trending lower for several months. Friday will also bring the monthly jobs report, which has been consistently strong. Overall, while economic data releases have been overshadowed by trade negotiations in terms of news coverage, they are arguably just as (if not, more) important because they provide us with tangible evidence of how the economy might be weathering the geopolitical uncertainty. And as we continue to march along toward the 11th year of the current cycle, it will be increasingly important to watch the economic data for signs of an inflection point.