Trade tensions began to moderate this week after President Trump announced a list of tariffs on $200 billion in Chinese goods; these goods will undergo a two-month review process, but Chinese and U.S. officials have raised the prospect of resuming talks after this list was released. Meanwhile the U.S. President took a very aggressive approach to NATO allies at the summit in Brussels, bashing their commitment to defense spending which was agreed upon in 2014. He further went to criticize Prime Minister Theresa May’s approach to a soft Brexit. Inflation data was also released with no great surprise in the report, however, it did raise doubts on the Fed’s trajectory for tightening.
The cooling trade tensions finally took a back seat to markets moving higher as the focus turned to earnings on Friday. The latest season is expected to see further growth in corporate bottom lines and may be a catalyst to continue the market rally. U.S. large company stocks advanced 1.5% this week while their small company counterparts slightly retreated after a strong advance the week prior. International developed and emerging market indexes followed suit to domestic large stocks, both gaining. Bonds again saw a moderate reprieve to declines as the long end of the Treasury yield curve declined ever so slightly.
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