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Market Yields Spike on Trade, Economy, and ECB

Market yields rose steadily this week on the back of positive developments in U.S.-China trade relations and healthy economic releases.  Bond yields were also supported by the announcement of a large stimulus package intended to reinvigorate European economies.  The European Central Bank (ECB) reduced its already negative deposit rate from -0.4% to -0.5% while restarting asset purchases at a rate of twenty billion euros a month beginning in November. 

In domestic economic releases, two inflation measures rose more than expected as both producer and consumer price indices continue to post 2%+ year-over-year advances.  The consumer sector appeared to remain robust, as August's retail sales report surprised to the upside with a 0.4% monthly advance. 

Despite the positive releases, the stage is set for the Federal Reserve's Open Market Committee to once again cut rates next week, with a 25 bps move widely expected at the meeting on the 18th.

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