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The Weekly Track certainty-2

- The Weekly Track – Certainty by Bob Savage
http://track.com/articles/the-weekly-track-certainty-2/

The last week was about bringing some certainty to the US FOMC rate policy. The stronger US economic data and the clear messages from Fed speakers made sure that the market heard that they plan to raise rates 25bps on March 15. The last word on that came appropriately from Fed Chair Yellen. The surprise was in the way markets reacted to such a message – with the USD not extending its rally while equities shrugged off any importance and continued to focus on Trump Policy shifts for direction. The commodity markets were mixed on the week while the bond markets universally suffered – both in the US and Europe. The next debate will be about whether policy divergence can hold for the ECB as the inflation risks pile up there. Election fears in Europe no longer balance against higher prices. FX markets are just less certain about the direction even if the FOMC is more transparent. The capital flows are beginning to look confusing – particularly to emerging markets - wi
th the weekend stories and ides of March event risks piling up – from the ECB to the Dutch election to the US budget and debt ceiling to the China growth data into the week ahead. The weekend news on the Fillon with potential switches to Juppe reopen Le Pen victory risks. The UK Hammond vows to not fiscally expand leave more trouble for the BOE and GBP while the Chinese plans for 6.4% GDP sound less than hoped and may bring commodity troubles and more CNY doubts. Less credit expansion and more efforts to control debt are also in play making flat the new up in China.