Deja Vu, Here We Go Again
The Fed announced that it was not going to hike this month and whilst this was expected, so too were the comments by the Fed. The Fed is waiting to see what happens and what fiscal policies are to be announced. Like the rest of us mere mortals they have no great insights as to what the Team Trump is going to do now that Trump is the President. On the back of nothing bonds weakened back to 2.48% which is pretty much where they ended last week, equities were slightly stronger, the dollar was stronger and commodities were slightly stronger. The chance of a rate hike in March rose to about 35% which is up a few points from earlier in the day. Remember the Fed said last year that there would be three hikes this year. This year is starting off in an all too familiar way.
Bill Gross was doing the rounds today. His sermon was much the same as what he has been saying for some time and that was the US was dramatically in need of productive infrastructure. Bill also continued his voice of concern about the strength of the US dollar. His view is that the strong dollar hurts the world economy and that a weaker dollar is good for world trade, repayment of debt and reduces borrowing costs. A strong dollar hurts world trade and affects emerging countries repayment of debt.
In other news the ISM Index showed a good surge in January rising to 56. Theresa May managed to push through her first part of the Brexit Bill with an overwhelmingly majority. The BOE is expected to revise its growth forecasts and announce its interest rate policy tomorrow.
Markets look set to be range bound until we start to see policy announcements and how those visions will be implemented.
Aussie Market Today.
Global equity markets were stronger and with China due back I expect the Aussie equity market to be stronger on the day. Bonds will be reflective of offshore influences and looks set to be weaker on the day.