Stocks rallied worldwide this morning after hearing President Trump will delay the March 1 deadline to increase tariffs on Chinese imports. President Trump tweeted, “The U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency and many other issues.” Overall, this was viewed as a sign of progress in the U.S. – Chinese trade talks.
Bonds prices are slightly down today and the 10-year treasury yielding 2.68%. Some notable news concerning the Fed comes from Vice Chair Richard Clarida. He mentioned the Fed will consider new tools, like capping Treasury Yields, as a way ease policy if needed. These comments shed light on how the Fed truly views the economy. They may not be as optimistic as the markets show.
Analysts are expecting GDP growth to skid below their previous projections as the reading on the fourth-quarter economic activity is likely to disappoint. Forecasters reduced their projections for fourth-quarter GDP due to the sharp decline in retail sales in December. Furthermore, disappointing news on industrial production, housing, factory order and business inventories added more downside risk. These factors have all lead to forecasters changing their predictions. Bloomberg Economics changed their projection from 2.9% all the way down to 2.0%.