Afternoon Note
Equity markets are higher today on positive news regarding a trade deal between the U.S. and Mexico. The markets also received a lift this morning following comments from Fed Chairman Jerome Powell at the Jackson Hole Symposium. The Fed chairman indicated the central bank would continue with its tightening policy if the U.S. economy continued to strengthen. The market took solace in the fact that fed policy will be data dependent.
As anticipated, President Trump held a news conference, announcing that “It's a big day for trade. It's a big day for our country.” He indicated that the U.S. and Mexico came to a bilateral trade agreement and that he would like to change the name NAFTA to U.S. Mexico Trade Agreement (USMTA). The president said this deal is a win for U.S. farmers.
Highlights of the deal:
Now, the pressure is on to get the deal signed into law before December 1, when the newly elected President, Andres Manuel Lopez Obrador, takes office. U.S. law requires a three-month waiting period before Congress can ratify it. To do so, the deal must be submitted to Congress a minimum of 90 days in advance. The tentative two-year deal with Mexico will require approval from Congress. President Trump and U.S. Trade Representative Robert Lighthizer said they plan on sending a Mexico-U.S. deal to Congress by Friday to get the clock started on the waiting period.
President Trump is trying to use the Mexico negotiation as a stepping stone to negotiate with Canada next. The markets rallied on the news, with the Dow tacking on another 50 points after being up 215 points.
There was no economic data out today. Tomorrow, we will get a look at consumer confidence; Wednesday brings GDP-second estimate, pending home sales and crude inventories; Thursday is personal income and spending, PCE Prices along with initial and continuing Claims. Friday, we will get a look into Chicago PMI and University of Michigan consumer sentiment.
Equity markets continue to build on their upside momentum.
Dow Jones Industrial Average
Breadth: Positive
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