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The second week in a row of low volatility which is usually advantage bulls. Monday saw a nice spike up for indexes and then the other four days of the week the range was very narrow. Monday’s rally was due to the lessening chance of TRADE WARS!!(tm):

Treasury Secretary Steven Mnuchin said over the weekend that the Trump administration would delay implementation of tariffs on Chinese goods and “put the trade war on hold” while working out details of a deal between the countries. At the end of trade negotiations that weekend, China agreed to buy larger amounts of U.S. goods to help narrow the trade deficit between the two economies, but didn’t agree to the specific U.S. target of $200 billion.

“It was noted that it was premature to conclude that inflation would remain at levels around 2%, especially after several years in which inflation had persistently run below the Fed’s 2% objective,” the minutes said. Only a “few” officials thought inflation might move “slightly” above the 2% target.

The indexes continue to mark time range bound at lower levels (with moderately high volatility) which should be a concern for bulls until it changes. Unlike consolidation after a move up, this is consolidation after a selloff which is not usually bullish. Selling Monday and Wednesday was offset by a rally Friday; tech in general helped the market quite a bit this week with Apple (AAPL) contributing particularly. The Federal Reserve meeting was a nothing burger.

The Federal Reserve acknowledged rising prices and said it now expects inflation to “run near” its 2% target “over the medium term,” in its most recent policy statement. The central bank held key rates unchanged, as expected. Traders who bet on the timing of Fed rate hikes see a 94% probability of a rate hike in June.

President Donald Trump late Monday gave top allies—the European Union, Canada and Mexico— an extension to the tariff exemption to allow more time negotiate a new pact to avoid the levies. The tariffs of 25% on steel and 10% aluminum—already in effect against China, Russia, Japan and others—were slated to come into effect on May 1, but have now been pushed back to June 1.

Tesla (TSLA) was so interesting this week it is worth it’s own section up here early in our recap – Musk is going full Tony Stark. Thursday, the company lost 5.6% amid heavy trading volume. The electric-car maker beat expectations for adjusted losses and sales in its quarterly earnings, but shares dropped during a long conference call in which Chief Executive Elon Musk gave analysts and the media the cold shoulder. Continue reading

The indexes swung back and forth between sleepy days Monday, Wednesday, and Friday to >1% swings on Tuesday and Thursday. Earnings and bonds were indeed the theme of the past week. The rise in Treasury yields and the narrowing of the spread between 2 and 10 year bonds were a major focus the week prior to last, and traders were wringing hands (and then not so much) again this week. The ten year briefly touched 3% for the first time since 2014 on Tuesday which sparked that day’s selloff. However a reversal took place quickly.

“Crossing 3% on the 10-year is something that will certainly raise concerns, but at this stage of the cycle, higher yields aren’t antithetical to rising stock prices. For the time being I think we’re fine, but we’re certainly keeping an eye on the yield curve, especially if the Fed becomes more aggressive,” said Bruce McCain, chief investment strategist at Key Private Bank. “Ultimately earnings remain the primary driver, along with the fact that the economy is still in pretty good shape.” Continue reading