Market gains returned last week as all five major markets closed higher. But that wasn’t all that returned as Geopolitical news overtook economics once again.

The activity early in the week was dominated by US-China trade tensions after the Department of Commerce added 28 Chinese companies to a “blacklist”, similar to the action done to Huawei, banning them from doing business in the United States.

The dynamic changed midweek, as China reported that they would be open to a partial deal and that they would increase their annual U.S. Agricultural purchases by another $10 billion dollars to a total of $50 Billion worth of goods.
On Friday, President Trump announced that the U.S. and China had reached a “Phase One” Trade deal and that the next set of tariffs set to go into effect this week on the 15th would not be happening.

While the trade news drowned out other headlines, Fed Chairman Jerome Powell stated in a speech in Denver on Tuesday that the Federal Reserve would soon begin to grow the balance sheet once again but made clear that that this action “…is not QE. In no sense is this QE.”
The Fed restarted its overnight repos temporarily for the first time in 10 years roughly two weeks ago due to bank liquidity issues. Powell later said that…
“This volatility can impede the effective implementation of monetary policy, and we are addressing it…”


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