94 Basis Points
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The U.S. Federal Reserve lowered interest rates by 25 basis points, the first cut in 11 years. However, this was overshadowed by a Tweet from President Trump announcing new tariffs on Chinese goods starting September 1.
HOW MARKETS REACTED
U.S. stocks fell across the board and the yield on 10-year Treasuries declined by 23 basis points, the biggest drop since 2012. Trade tensions drove global markets lower. The CBOE Volatility Index hit 20, up from 12 the previous week.
WHAT THIS MEANS
Beyond the U.S. – China trade dispute, there were a few bright spots: mortgage rates continue to trend down providing support for housing, and Friday’s jobs report showed ongoing growth in the economy.
WHAT TO WATCH
China is reporting trade data on Thursday and inflation and credit data on Friday. The U.K. and Japan report GDP numbers on Friday. But the next move in the U.S. – China trade negotiations is likely to dominate markets.
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