The week began with President Trump becoming the first sitting U.S. President to enter North Korea in a Sunday meeting with Kim Jong Un. The meeting appeared to be a positive step towards the denuclearization of the Korean Peninsula. Protests continued in Hong Kong with the occupation of a legislative building on Monday. Demonstrators continue to protest a proposed bill that would allow extradition of Hong Kong citizens to China. The week ended with a strong June jobs report with nonfarm payrolls adding 224,000 against expectations of 165,000; however, the unemployment rate ticked 0.1% higher.
The S&P 500 reacted well to easing trade tensions coming out of last weekend’s G20 meetings, rising to a new all-time high before the U.S. holiday. Friday’s jobs report, did however, have significant consequences for markets as expectations diminished that the Fed might cut rates to boost the economy at the July FOMC meeting. International and domestic small cap stocks similarly gained during the week albeit weaker than U.S. large caps. Changing expectations also caused interest rates to jump Friday. Short-term interest rates on U.S. Treasuries ended the week much higher, while long-term U.S. Treasury rates closed only slightly higher after falling mid-week.
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