Stocks continued to be volatile driven by news surrounding the US’s trade war with China and fears of a slowing global economy. The S&P 500 declined 1.4% and the Dow fell 1.0% for the week. Abroad, Japan gained 1.4% and Europe rose 0.5% for the week. The 10-year Treasury yield continued to decline ending the week at 1.52%.
President Trump said he would raise the tariff rate on existing and planned tariffs by 5 percentage points. The tariffs in place on $250 billion of Chinese goods will rise 30% on October 1st. Tariffs planned for 9/1 and 12/15 on an additional $300 billion in goods will rise 15%. China said it would add on to tariffs by 5% and 10% depending on the items on $75 billion of US goods starting 9/1.
Fed minutes from their July meeting showed mixed opinions about the rate cut with some favoring a larger cut and others not wanting one at all. Trade policy was also considered a “persistent headwind.”
Germany issued 30-year bunds at a negative yield for the first time.
Existing home sales rose 2.5% in July over June topping expectations and they gained 0.6% over a year ago, the first year over year gain in 17 months.
A gauge of manufacturing activity declined in the US, Japan, Germany, and the eurozone in August. It was the first decline in the US since 2009.
At the Fed’s conference in Jackson Hole, Fed Chair Powell spoke about the large disruption to the US economy the trade war is having and stated that the Fed is likely to cut the Fed funds rate again soon.