Markets ended the week on a down note following news that the U.S. was moving forward with tariffs on $50B of Chinese goods. In response, China said it would immediately levy counter-tariffs on agricultural goods, aircrafts, and automobiles.  Outside of trade-related headlines, markets were focused on global monetary policy.

On Wednesday, the U.S. Fed raised rates by 0.25% to a range of 1.75%-2.0%, citing an improving economy and strong labor market. The Fed also updated its interest rate forecast, commonly referred to as the “dot plot”, which showed the bank expects to raise rates two additional times in 2018 for a total of four increases this year. Markets currently expect the remaining hikes to occur in September and December.

On Thursday, the European Central Bank (ECB) announced plans to phase out its stimulus over the final three months of 2018. At the same time, the ECB indicated that it would keep key interest rates, currently at 0% or below, unchanged until the summer of 2019.  With this announcement, the ECB managed to deliver a “hawkish” message–the end of QE–with a “dovish” spin–maintaining current rates for another year–without triggering the type of “taper tantrum” reaction that markets had in 2013 when the Fed first broached the idea of scaling back its stimulus.

On Friday, the Bank of Japan (BOJ) announced no changes to its current monetary policy. Unlike the Fed and ECB, which are moving to tighten monetary policy, the BOJ is not expected to change its current aggressive stimulus in the near-term.