Weekly Market Commentary 07/06/2018

Just as former Fed Chairman Ben Bernanke asserted last month that the U.S. economy is facing a ‘Wile E.Coyote’ moment in 2020 (i.e. heading for the proverbial cliff), the current Federal Reserve appears to be invoking MAD Magazine’s venerable mascot, Alfred E. Neuman, exhibiting a ‘what me worry’ attitude towards the flattening yield curve and escalating trade tensions. To be sure, the Fed is not entirely dismissing these ominous indicators. According to the minutes of the June 12-13 policy meeting released this week, Fed officials devoted considerable attention to these developments and acknowledged their potential threats to the outlook. Still, the policy makers concluded that they do not pose enough of a risk to derail the current plan of gradually lifting short-term interest rates aimed at preventing the economy from overheating.