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The Week Ahead: Will Investor Confidence Remain High?

We're watching the release of several consumer data points as well as earnings from Walgreens, Conagra, and General Mills.

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We head into the final week of the second quarter with investors buoyed by positive signs from the Federal Reserve and on trade. Equity markets set all-time highs after Fed chairman Jerome Powell hinted that the central bank may loosen its monetary policy in the coming months amid China-U.S. trade tensions and other signs of weakness in the economy. Meanwhile, with President Donald Trump scheduled to meet with Chinese President Xi Jinping at the Group of 20 summit this week in Japan, investors are optimistic that a trade truce can be reached that would stave off new tariffs.

But the current expansion is a decade long, although stock investors appear confident that the Fed can help forestall the inevitable recession. But after the Fed's dovish statement, bonds also rallied, sending the yield of the 10-year Treasury below 2%, the lowest since late 2016, and the price of gold, considered by investors to be a safe haven, almost hit a six-year high. Depending on your view of the economy, these latter moves could be a sign of trouble down the road.

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