A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.
As Good as it Gets?
Share this story:
Alan Rose Foreign Exchange Head Trader
U.S. Q3 GDP came in at 3.5% this morning (at consensus expectations) and that, combined with Q2’s outstanding performance of 4.2%, provided the best back-to-back quarters since 2014. As good as these two quarters of growth have been, markets and equities in particular have become increasingly dour about the prospects for future growth as a combination of rising borrowing costs, cooling global demand, trade friction, and the boost from the U.S. tax cuts begins to fade.
The numbers within the numbers give reason for concern about future growth. Household spending, which accounts for about 70% of GDP, was revised lower from 4% to 3.6%. Net exports subtracted 1.91% (the most since 1985) from growth as a strong dollar combined with weak global demand for U.S. exports is taking its toll. Housing appears to have entered a broad slowdown as residential investment fell by 2.5% as rising interest rates begin to bite.
Q4 is currently projected to grow at nearly 2.5%. Keys to future growth will be the future course of Federal Reserve monetary policy of which we will gain key insights this morning at 9:00 a.m. PST when Chairman Powell will be speaking before the Economic Club of NY and will be taking questions. Markets are still anticipating the Fed to raise interest rates again on December 19 with the probability sitting at 77%.
The other key component for future growth will hinge on global trade and key to that will be our trading relationship with China and the ripple effect the two largest economies have on the rest of the G20 and emerging market world. President Trump and President Xi will be meeting at the G20 meeting in Argentina this weekend and it will be important to see a positive outcome of this meeting.
Want to learn more about international finance, economics, and global events? Sign up for our other Foreign Exchange emails and videos!
Follow City National Bank on social media:
Investment and Insurance Products:
Are Not insured by the FDIC or any other federal government agency
Are Not deposits of or guaranteed by a Bank or any Bank Affiliate
May Lose Value
This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. The Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.
Now accepting scholarship apps Celebrating 40 years of service -- A loan to an innovative company -- Affording your dream home -- Mergers and a new branch in Raleigh View this email in your browser Forward to a friend
Your Market News update for May 30, 2019 | View online Market News News that's moving the market now As Trade-War Worries Linger, Market Seems to Lack Buying Conviction May 30, 2019 8:40 AM | JJ Kinahan 6 min read | Daily Market Update