Treasury prices are higher following the European Central Bank (ECB) announcement and bearish U.S./China trade comments from the White House.  The ECB chose to leave policy rates unchanged and suggested it may keep rates unchanged at least through the summer. The official statement also cited rising downside risks to growth, and just before the ECB release, the January PMI report for the euro zone showed more weakness in the region, including the first decline in German manufacturing activity since 2014. The ECB also suggested it would continue with bond (QE) reinvestments even after the first rate hike, similar to what the Fed did.

Commerce Secretary Wilbur Ross poured cold water on any hopes that a resolution to U.S./China trade tensions is near. In a CNBC interview this morning, Ross said “we’re miles and miles from getting a resolution.” It would appear that Ross is attempting to downplay the importance of next week’s meeting in Washington between officials from both countries, which the markets have been eagerly anticipating for signs of thawing relations between the two largest economies in the world. “People shouldn’t think that the events of next week are going to be the solution to all of the issues between the United States and China. It’s too complicated a topic,” Ross said.

Jason Haley
Managing Director, Investment Management Group