Both the U.S. and China have announced a phase 1 trade deal. While not all the details have been released, the following has been released:
- The U.S. will not impose the additional tariffs scheduled to go into effect on 12/15.
- The U.S. will also reduce the tariff rate from 15% to 7.% on 120BN of goods.
- US Tariffs of 25% on approximately $250BN of imports will remain.
- China will increase agricultural imports by $32BN from previous levels over the next two years.
- China made commitments on intellectual property, including counterfeiting, trademarks, and pharmaceutical rights.
It is expected that the agreement will be signed in early January and take effect within 30 days later.
The markets yawned after the announcement on Friday as the trade progress had already been priced in. U.S. stock indexes saw modest gains for the week with larger gains in foreign stocks. Retail sales and unemployment claims were lackluster but likely due to how late Thanksgiving came this year.
The 10-year Treasury yield fell to 1.818%. Crude oil rose to $59.80 a barrel. The U.S. dollar fell against a basket of currencies and gold prices rose to $1480.50 an ounce.
In economic numbers this week:
- The Commerce Department reported retail sales in November were unchanged from October. Excluding volatile food and energy sales rose a seasonally adjusted 0.2%.
- The Labor Department reported
- First time claims for unemployment rose 49,000 to a seasonally adjusted 252,000. The four week moving average of claims rose to 224,000. It is believed that the increase in claims was due to difficulty in seasonal adjustments as Thanksgiving fell later this year.
- The consumer-price index rose a seasonally adjusted 0.3% in November. Large contributors to the increase were energy and rent. Excluding volatile food and energy, prices rose 0.2%. From a year earlier consumer prices rose 2.1%. Excluding food and energy core prices were up 2.3%.
- The producer-price index was unchanged in November. Excluding, food, energy and trade services producer prices were also unchanged. From a year earlier, producer prices have risen 1.3%.
- The EIA weekly oil report is here wpsrsummary (9). Also, the EIA reported in the past week:
- Field production of crude oil fell from 12.9MM barrels per day to 12.8MM barrels per day.
- Natural gas storage fell by 73BN cubic feet and is at the five year average at this time of year.
- Baker Hughes reported the number of active oil rigs rose 4 to 667 and the number of active gas rigs fell 4 to 129.
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Loren C. Rex, CFP®, AIF®, MA Erik A Smith
President Managing Partner
Generations Financial Planning & Wealth Management 269-441-4143
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Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
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These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.