U.S. Inflation and Earnings take Center Stage

July 9, 2018

U.S. Inflation and Earnings take Center Stage Photo

The markets will navigate a significant amount of noise this week from geopolitical events, including the announcement of President Trump’s Supreme Court nominee, NATO summit and continued trade tensions, which are all creating major headlines. Several other events will also shape the markets’ direction, as U.S. inflation data will likely frame the discussion of whether the Federal Reserve will increase rates more or less than expected. The inflation reading comes at a time when the flattening yield curve continues to provide cautionary signals on economic growth and future equity market performance.

This week will also see an acceleration in quarterly earnings reports, with several of the large U.S. banks releasing results late in the week. I continue to be constructive on equity market performance during the third quarter due to economic fundamentals, but I am keeping a close eye on the yield curve, oil prices and credit spreads for a signal to become more cautious.

Tags: Federal Reserve | NATO | trade tensions | Yield curve

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