RockCreek Daily Market Update

GLOBAL MARKET SNAPSHOT 

Equity Markets:
Global equities largely shrugged off further commentary from President Trump on everything from additional tariffs on China, currency manipulation by trading partners, and detrimental interest rate hikes.  The strong gains seen in China overnight (Hang Seng 0.8%, Shanghai Comp 2.1%) were largely sustained through the U.S. session as the iShares MSCI China ETF (MCHI) increased 1.3%. A weaker dollar helped emerging market shares more broadly with EEM gaining 1.4% while LatAm was the strongest performing region. Performance was mixed in the U.S. with more trade sensitive large cap staples seeing a rebound.

Bond Markets:
Treasury bonds experienced their worst performance since mid-May. 10-year and 30-year yields increased 6bps and 7bps, respectively, while the 2s10s spread widened to 30bps. Bunds and Gilts rose in sympathy with 10-year yields up 4bps to 0.37% and 5bps to 1.23%, respectively. 

Currency Markets:
President Trump was successful in taking the air out of the U.S. dollar rally as he criticized China and the European Union for “manipulating their currencies and interest rates lower.” The euro and Chinese renminbi strengthened 0.7% and 0.1%, respectively. Commodity currencies were the strongest performers with Loonie 1.1%, Aussie 0.9%, and Kiwi 1.0%. Similarly, in emerging markets Brazilian real and South African rand led gaining 1.4% and 1.0%, respectively.

Commodity Markets:
Commodities were up across the board with the headline Bloomberg Commodity Index gaining 0.8%. Despite President Trump’s threats to slap tariffs on all Chinese imports, grains rallied on Friday with corn 1.1%, wheat 2.3%, and soybeans 0.4%. Wheat led on the day due to ongoing production concerns out of Europe. Spot gold increased 0.7% to $1,231 per oz on weakness in the dollar, while copper jumped 2.3%.

MACRO OVERVIEW

While geopolitical headlines were again in the driver’s seat, there were a couple notable releases out of Canada that exceeded expectations. Consumer prices rose 0.1% in June bringing the year-over-year change to 2.5%, which was up from 2.2% in May. This was the largest 12-month increase since February 2012. According to the release, the recent trend higher in the CPI “reflects increases in prices for gasoline and food purchased from restaurants, as well as offsetting factors such as lower price inflation for electricity and telephone services. These movements coincide with recent improvements in the economy and the labour market, as well as an increase in oil prices.” Statistics Canada also released its monthly report on retail trade that showed sales to have increased by 2.0% in May following a -0.9% decline in April. This is compared to consensus expectations for a 1.1% increase. Excluding motor vehicles and gasoline, the main contributors to gains in May, retail sales increased by 0.9%. In response, Canadian 10-year yields rose 7bps to 2.17%, Loonie appreciated 1.1%, and TSX declined -0.7%. 

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The information contained herein has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security or to participate in any strategy. Nothing contained herein shall be relied upon as a promise or representation as to the past or future performance.   This material represents the views of RockCreek.  This information should not be construed as investment advice. Some of the information may be provided to discuss general market activity, industry or sector trends, or other broad-based economic, market, or political conditions.  Information and opinions are as of the date of this material only and are subject to change without notice.  RockCreek has no obligation to provide any updates or changes to such information. The opinions, forecasts, assumptions, estimates, and commentary contained in this material are based on information provided to RockCreek on both a formal and informal basis.  Further, any such opinions, forecasts, assumptions, estimates, and commentary are made only as of the date of this material, are subject to change at any time without prior notice and cannot be guaranteed as accurate.

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