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Update 05/13/19 at 8 a.m. CDT: U.S. stock futures are down sharply pre-market Monday morning with the Dow off about 500 points and the S&P 500 index down 2%. Meanwhile, the 10-year Treasury is trading at 2.4 % in a flight-to-quality trade after China announced retaliation with higher tariffs on a range of U.S. goods. The escalation comes after trade talks ended last week without a resolution. President Trump tweeted this morning that the trade situation could “get worse” if there is retaliation, and the markets have reacted to the news.

Last week: Global stocks declined last week, with the markets focusing on U.S.-China trade tensions. The S&P 500 ended down 2.1%, its worst week year-to-date. International developed stocks (MSCI EAFE) declined 2.6%, and emerging market stocks (MSCI EM) were down 4.5% for the week. Bond yields declined as investors sought safe-haven assets, with the 2-year and 10-year Treasuries trading at 2.25% and 2.45% respectively at week-end. Economic data on producer and consumer prices showed signs that inflation remains in check, with April’s headline U.S. CPI coming in at a 2% increase, year-over-year, below expectations.

This week: Market participants will see data from U.S. retail sales, industrial production and U.S. housing starts this week. In Europe, a key focus will be the European Parliamentary Elections later this month, May 23 – 26. These elections will be important for monetary policy going forward as current ECB President Mario Draghi’s term expires in October this year.

This communication is for informational purposes only. It is not intended as investment advice or an offer or solicitation for the purchase or sale of any financial instrument.

Indices are unmanaged, represent past performance, do not incur fees or expenses, and cannot be invested into directly. Past performance is no guarantee of future results.