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Markets and economy

Capital market impact

Trade optimism drives modest rebound in equities

President Trump announced a “phase 1” deal was reached between the U.S. and China. Specifics at this point are limited to delayed tariff implementation and agricultural purchase, with non-specified progress on more structural issues that will require phases 2 and 3. The news was sufficient to break a three-week losing streak for equities, but skepticism is warranted given the whipsaws driven by trade headlines over the past year. 

Economic commentary

Consumer inflation downshifts in September

The trend in consumer inflation remains soft even as the ultra-low unemployment rate and improved consumer spending point to tighter labor and product markets. Lower energy costs again held back the consumer price index (CPI) for September. A flat reading for the month kept the 12-month change in the CPI at a low 1.7 percent. Headline inflation readings could continue to swing with energy costs in coming months, especially given the elevated tensions in the Middle East at present.