Stocks continue to ticker higher Monday even though trade tensions remain a top pressure point amid a weakening world economy. U.S. Treasury Secretary Steven Mnuchin said trade tensions between the two countries remain, but the U.S. and China are “getting close to the final round of concluding issues.” It is believed that both countries feel a matching need to de-escalate the situation. Two phone calls are scheduled for this week, but an in-person meeting will likely be needed to conclude negotiations.
Bond prices are relatively flat, and the 10-year treasury is yielding 2.56%. Last week, Central bank signals and IMF remarks underscored the cautious mood after upbeat U.S. bank earnings. The S&P 500 notched its third consecutive week of gains. Internationally, the IMF called on Germany, South Korea and Australia to do more to boost the slowing growth in their country and in the global economy. In the U.S. and Europe, the Central banks continued with their dovish approach.
The fourth quarter GDP release showed an inventory accumulation of $97 billion. This came after a $90 billion build in the third quarters. This inventory overbuild could have a strong reach across the U.S economy. Restrained production schedules will impact total output and workers wages. As a result, categories such as import demand and household spending will deteriorate. Overall, it seems like data continues to support a global slowdown.