Overview: Global equities rallied late in the week after positive trade and credit data was reported out of China. Financial companies such as JP Morgan and Wells Fargo helped provide an unexpectedly strong start to the first quarter earnings season in the U.S., with the S&P 500 index finishing the week up 0.6%. Bond yields rose, with the 10-year Treasury finishing the week at 2.56%, up from 2.40% at the start of April. Modestly rising rates have led to negative bond returns over the month, but both the Bloomberg Barclays Aggregate and Municipal indices are up about 2.5% year-to-date.
Looking Ahead: Markets will focus on earnings this week. Goldman Sachs, Citigroup, and Bank of America are a few of the companies that will highlight the earnings week. On the economic front, we will have data including industrial production, trade, retail sales, and housing starts. Eyes will remain on the U.S.-China trade discussions, and on the ongoing Brexit saga. Last week, the European Union and the UK agreed to extend Article 50 (the process by which the UK will depart the European Union) from April 12 to October 31. A delay mitigates the risk of a disorderly Brexit and the disruption of short-term “cliff dates” extensions. At the same time, it may reduce the incentive for parliamentarians to compromise. Central bank policy in Europe remains an ongoing topic, with the European Central Bank recently maintaining forward guidance that would keep interest rates on hold through the end of this year.
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