With the Federal Reserve (Fed) taking a pause from making monetary policy changes, attention turns to the European Central Bank (ECB) meeting this week. It is widely expected that European policymakers will keep interest rates unchanged, but the chances for additional stimulative policy changes continue to increase as the growth outlook dims.
From a trade perspective, I am expecting good news from both the U.S. and China, as well as reduced odds for a “no-deal” Brexit this month. Additional upside exists for U.S. equities in this environment should trade news turn positive. I expect stocks to reach new all-time highs in the S&P 500 Index before Memorial Day, as reasonable valuations and a less restrictive Fed support gains. During the same period, I expect yields to rise modestly, but the 10-year Treasury to remain below 3%.
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