MACRO NEWS

 

Yellen testifies on Capitol Hill
US Federal Reserve chair Janet Yellen testified on monetary policy before the House Financial Services Committee this week as markets continued to digest the Fed's recently announced balance sheet reduction plans. Chair Yellen reiterated that the Fed expects a tightening labor market to lead to increased inflation, despite recent weak inflation data. She added, however, that the Fed may change course from its policy plans if needed. Last month, the central bank raised rates for the third time since December 2016.

 

China inflation running Low
The United States is not the only region experiencing low inflation. China's consumer price index was reported at 1.5%, missing a 3% target. Its producer price index was reported at 5.5%, which was in line with expectations. It is worth noting that the slowdown in inflation is consistent with the slowdown in inflation in the US and many other countries. It is occurring as policymakers in the US, Canada and eurozone are all moving, or signaling that they will move, away from the low-interest-rate environment of recent years. 

 

G-20 summit concludes
The G-20 summit of leaders of major economies concluded in Hamburg, Germany this week after discussions on a broad range of topics, including trade, climate change and immigration policy. Many leaders attending the summit appeared at odds with US president Donald Trump, particularly over trade policy and climate change. On the trade front, Japan and the European Union signed the Japan–EU Economic Partnership Agreement after several years of negotiation.

 

Bank of Canada raises rates
The Bank of Canada raised rates by a quarter of a percentage point to .75% while suggesting that monetary policy will remain accommodative for the foreseeable future. Of concern is the stability of the housing market, where prices have risen rapidly in recent years, particularly in areas such as Toronto and Vancouver, where prices have doubled since 2009.

 

US retail sales off
Headline retail sales were down .2% month over month, with six of the 16 categories falling into negative territory. Department stores in particular were hurt, falling .7% after a similar drop in May. The recent drop in sales and subsequent selloff in retail stocks have attracted the interest of professional investors in search of a bargain. 

 

THE WEEK AHEAD

 

Date

Country/Area

Release/Event

Mon 17 Jul

eurozone

Consumer price index

Wed 19 Jul

Japan

Policy rate

Wed 19 Jul

United States

Housing starts

Thu 20 Jul

United States

Continuing jobless claims

Thu 20 Jul

eurozone

Flash consumer confidence indicator

Thu 20 Jul

United Kingdom

Retail sales

Fri 21 Jul

Canada

Consumer price index

 

 

 

 

Stay focused and diversified
In any market environment, we strongly believe that investors should stay diversified across a variety of asset classes. By working closely with your financial advisor, you can help ensure that your portfolio is properly diversified and that your financial plan supports your long-term goals, time horizon and tolerance for risk. Diversification does not guarantee a profit or protect against loss.

 

The information included above as well as individual companies and/or securities mentioned should not be construed as investment advice, a recommendation to buy or sell or an indication of trading intent on behalf of any MFS product.

 

Securities discussed may or may not be holdings in any of the MFS funds. For a complete list of holdings for any MFS portfolio, please see the most recent annual, semiannual or quarterly report. Full holdings are also available on the individual Fund Summary tab in the Products section of mfs.com.

 

Past performance is no guarantee of future results.

 

Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg New; Financial Times; Forbes.com; CNNMoney.com; NBCNews.com.

 

This content is directed at investment professionals only.

 

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