While Last Week Was Very Eventful, Investors Shrugged Off Most of the Developments That Drove Headlines
President Trump’s comments at the G7 meeting the previous weekend generated a lot of criticism, but investors mostly ignored any possible implications. Similarly, the U.S./North Korea summit appeared to open the way for further dialogue, but did not move the markets. Likewise, the Federal Reserve’s interest rate increase last week had already been baked into market expectations. Stock prices did decline on Friday in reaction to the U.S. announcing it would impose tariffs on Chinese goods, but equity markets were mostly flat to mixed for the week as a whole.
- Investors mostly ignored the U.S./North Korea summit and last week’s Fed meeting. But rising trade risks are weighing on sentiment.
- U.S. growth is accelerating, as is inflation. This should prompt the Fed to continue increasing rates.
- We see several possible risks to stocks, but believe equities should continue to outperform bonds over the next year.