The U.S. reached a “phase one” deal with China on Friday providing good news to U.S. consumers for the remainder of the holiday season. The U.S. will halt new tariffs on Chinese goods that were set to begin on December 15 and will reduce the tariffs on consumer goods that were implemented in September. The prior tariffs on $250 billion of Chinese goods will remain. China agreed that purchases of U.S. agriculture goods will increase by $32 billion over the next two years. This and forward movement on a North American trade agreement gave President Trump some positive news in the face of an impeachment vote set to take place in the House next week. In other political news, Boris Johnson and the Conservative party had clear victory coming out of last week’s election – signaling that a final Brexit agreement with the EU is expected of this government.
Citing a favorable economic outlook and very mild inflation, Fed Chairman Powell indicated this week that the Fed is not expecting to initiate rate increases in the near future. This provided further stabilization to the markets in a week where the November retail sales data was less than impressive. U.S. stocks moved slightly higher on the week nearing a 30% total return for 2019. International stocks marked strong performance last week, closing a bit of the gap versus U.S. stocks this year. Bond prices held steady with the accommodative stance from the Fed. Bond funds have had a spectacular year with returns boosted by the Fed’s rate cuts.