Most investors recognize that central banks are a key driver in the ebb and flow of equity prices through time. But the relationship between interest rates, monetary policy and the stock market is constantly evolving. Some analysts advise that in recent years this link has become unusually influential. As we’ll see, that’s a theory that finds support in the data.

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Trump plans to declare new nat’l emergency to impose tariffs: The Hill
Progress reported in US-Mexico trade talks: Reuters
Strong US job growth expected in today’s update for May: Reuters
Is US recession worry overblown? WSJ
Fed faces challenges in offsetting headwinds from trade conflicts: CNBC
German industrial product fell sharply in April: MW
US imports and exports tumbled in April as trade gap narrowed: Bloomberg
US job cuts surged in May, lifting annual change to +86%: CG&C
Jobless claims in US hold steady at low level: CNBC

The US stock market has been on a roller coaster this year, but the volatility hasn’t dented the relatively smooth bull market in securitized real estate shares. In the wake of the tech sector’s slide in recent weeks, real estate investment trusts (REITs) have become the top-performing US equity sector year to date, based on a set of exchange-traded funds.

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Trump: more progress needed to avert new tariffs on Mexico: BBC
US plans arms package for Taiwain despite China’s protests: Bloomberg
Fed’s Beige Book: US economy expanded at ‘moderate pace’: MW
German factory orders rose more than expected in April: Bloomberg
Are markets overpricing the odds of a Fed rate cut? CNBC
Oil prices slide on weaker economic outlook: NY Times
Global growth slowed to 3-year low in May: IHS Markit
US ISM Non-Mfg Index rose more than expected in May: CNBC
US Services PMI for May reflects slowest growth since 2016: IHS Markit
US private employment growth slowed sharply in May: ADP

The US recession warnings are flying every which way lately in the wake of an inverted yield curve. The spread on the 10-year less 3-month yields in particular has unleashed a wave of predictions that a new downturn is near. But some analysts point out that another widely followed spread — 10-year less 2-year yields – is still positive, albeit modestly so. What’s an informed investor to do? Wait for both spreads to confirm a recession forecast before betting the farm on contraction.

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Senate Republicans push back on Trump’s plans for tariffs on Mexico: NY Times
Mexican officials to meet with VP Pence today for tariffs talk: Reuters
Trump: there’s ‘always a chance’ of military action against Iran: CNBC
Fed’s Powell is open to rate cuts if warranted: WSJ
World Bank cuts forecast for global growth in 2019: WB
US auto sales rebounded in May: Yahoo Finance
US factory orders’ 1yr trend was subdued in April at +1.0%:

The outlook for the Global Market Index’s (GMI) risk premium fell in May, edging down to an annualized 4.5%. The projection marks a relatively sizable decline from the 4.8% estimate in last month’s update. Today’s revision for GMI — an unmanaged market-value-weighted portfolio that holds all the major asset classes (except cash) — represents the ex ante premium over the projected “risk-free” rate for the long term.

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Fed’s Bullard: rate cut may be near: CNBC
Big tech may have big problem with new US antitrust probe: Reuters
Australia’s central bank cuts interest rates: MW
Rising share of companies expect climate change to impact business: NY Times
Global manufacturing activity contracted in May: IHS Markit
Soft residential housing sector weighed on US construction spending in April: AP
Mfg PMI for US slumps to lowest print in nearly a decade: IHS Markit
US ISM Mfg Index fell in May, reflecting weakest growth since 2017: MW

Stocks around the world took a hit in May as trade-related fears weighed on the outlook for the global economy. The deterioration in sentiment was a boon for US bonds, which attracted a surge of asset flows in the rush for a safe haven last month.

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China, Mexico open to talks to defuse trade conflict with US: WSJ
Does Trump’s trade policy threaten longest US expansion in history? MW
Trump has doubts about Mideast peace plan: Politico
Trump insults London’s mayor ahead of UK visit: Bloomberg
Trump administration considered tariffs for Australia: The Hill
Eurozone mfg sector continued to contract in May: IHS Markit
UK Mfg PMI fell sharply in May, signaling contraction: IHS Markit
White House’s top economist, Kevin Hassett, will depart ‘shortly’: NY Times
Revised data shows strong US consumer sentiment ‘eroded’ in late-May: UoM
Is inverted 10yr-3mo yield curve predicting recession? Maybe not: Econobrowser
US consumer spending’s 1yr trend slipped to moderate +4.3% in April: