Muted inflation expectations may lead to further rate cuts

The Big Number
The expected change in prices (inflation) during the next 5-10 years, as compiled by the University of Michigan.

What this means
The muted inflation expectations of consumers may result in further rate cuts from the U.S. Federal Reserve.  Lower rates would provide support for the economy and help improve market sentiment.

Market Notes
The clouds that have hung over global growth are showing early signs of lifting. While the details of the initial trade agreement between the U.S. and China remain to be hammered out, a sense of optimism has returned to the markets.

The Markets’ Reaction
Stocks rose globally with the S&P 500 up 0.6% for the week.  Bond yields moved higher, with U.S. rates up about 20 basis points across the yield curve. Hope around a negotiated Brexit deal pushed international developed market stocks (MXEA) to their biggest weekly rise in four months.

What to Watch
It’s earnings season again.  Expectations have been marked down, so the bar to outperform is low.  On Friday, China reports Q3 GDP figures.  U.S. retail sales are due out on Wednesday.


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