Week 28 in Review

Fed chair suggests monetary policy won’t change

China inflation running low

G-20 summit concludes

Bank of Canada hikes rates

US retail sales miss expectations


Global equities moved up this week with solid gains. The yield on the US 10-year Treasury note faded seven basis points on the week, to 2.32%, while the price of West Texas Intermediate crude oil moved up to $46.35 a barrel from $44.50 a week ago. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), dropped to 9.89 from 11.75 last week.




Yellen testifies on Capitol Hill

US Federal Reserve chair Janet Yellen testified on monetary policy before the House Financial Services Committee this week as markets continued to digest the Fed’s recently announced balance sheet reduction plans. Fed Chair Janet Yellen’s semi-annual testimony before Congress struck a generally dovish tone, according to the firm’s traders.

Yellen signalled that the Fed was in no rush to tighten monetary policy, and offered reassurances on the current state of the economy. Investors may also have been relieved that she avoided repeating the reference she had made in late June to asset prices as being “somewhat rich.” Global equities moved up this week with solid gains.

China inflation running Low

The United States is not the only region experiencing low inflation. China’s consumer price index was reported at 1.5%, missing a 3% target. Its producer price index was reported at 5.5%, which was in line with expectations. It is worth noting that the slowdown in inflation is consistent with the slowdown in inflation in the US and many other countries.

It is occurring as policymakers in the US, Canada and Eurozone are all moving, or signalling that they will move, away from the low-interest-rate environment of recent years.

G-20 summit concludes

The G-20 summit of leaders of major economies concluded in Hamburg, Germany this week after discussions on a broad range of topics, including trade, climate change and immigration policy. Many leaders attending the summit appeared at odds with US President Donald Trump, particularly over trade policy and climate change.

On the trade front, Japan and the European Union signed the Japan–EU Economic Partnership Agreement after several years of negotiation.

Bank of Canada raises rates

The Bank of Canada raised rates by a quarter of a percentage point to .75% while suggesting that monetary policy will remain accommodating for the foreseeable future.

Of concern is the stability of the housing market, where prices have risen rapidly in recent years, particularly in areas such as Toronto and Vancouver, where prices have doubled since 2009.

US retail sales off

Headline retail sales were down .2% month over month, with six of the 16 categories falling into negative territory. Department stores in particular were hurt, falling .7% after a similar drop in May.

The recent drop in sales and subsequent selloff in retail stocks have attracted the interest of professional investors in search of a bargain.


THE WEEK AHEAD Date Country/Area Release/Event
Mon, 17 Jul Eurozone Consumer price index
Wed, 19 Jul Japan Japan Policy rate
Wed, 19 Jul United States Housing starts
Thu, 20 Jul United States Continuing jobless claims
Thu, 20 Jul Eurozone Flash consumer confidence indicator
Thu, 22 Jul United Kingdom Retail sales
Fri, 21 Jul Canada Consumer price index


All the Best and have a great week ahead



Farringdon Group

+60 3 2026 0286


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