July 20th 2018 Market Minute

July 20, 2018

Relatively quiet week for world markets. US Equity indices were mostly positive. US Treasury yields rose slightly with the 10 Year US Treasury rising from 2.85% to 2.89% and the 30 Year US Treasury rising from 2.96% to 3.03%. Crude Oil maintained it’s level in the high $60’s, closing at $68.14.

Source: Thompson One Financial

Some matters to consider regarding a ‘Trade War’ between the US and China.

US allows the free flow of ‘capital’ into and out of it’s borders and banking system. China currently places significant restrictions on the free flow of ‘capital outside its borders and banking system. This restriction is irrespective of if you are one of its citizens, a Chinese based company, a foreigner, or foreign-based company.

The US Dollar is readily exchanged for goods, services, or other currencies almost anywhere in the world. US Dollar’s currently make up 62.48% of the ‘Official Foreign Exchange Reserves’ of IMF (International Monetary Fund) members.
The Chinese Yuan (Renminbi) is readily exchanged for goods and services in all Provinces within the border of mainland China and Taiwan. Daily Chinese Yuan transactions are increasing, but make up less 1.39% of the Official Foreign Exchange Reserves’ of IMF (International Monetary Fund) members.

The US Trade Deficit with China is about 500 Billion US Dollars. This is a net amount, thus the US and China buy each others products and services but the US buys 500 Billion more. The US therefore has this amount more than China to assess tariffs on.

Source: US Federal ReserveInternational Monetary Fund

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

International investing involves special risk such as currency fluctuation and political instability and may not be suitable for all investors. These risk are often heightened for investments in emerging markets.

All Indices are unmanaged and may not be invested into directly.

The fast price swings in commodities and currencies will result in significant volatility in an investor’s holdings.

To determine which investments may be appropriate for you, consult with your Financial Advisor.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond Values will decline as interest rates rise and bonds are subject to availability and change in price.

The opinions expressed in this material do not necessarily reflect the views of LPL Financial.

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC