Summary for the 21st of February 2019


FOMC Minutes from the 29th-30th of January meeting shows that many of the FOMC members agreed about holding off the rate hikes, how long this would last was not certain. Many of the members argued that rate hikes might prove necessary only if inflation outcomes were higher than expected. This was in line with what Jerome Powell said at the press conference after the January meeting. The Minutes also shows that many of the members indicated that , if the economy evolved as they expected, they would view it as appropriate to raise the target rate later this year. Further, the Minutes points at uncertainty about slowing global economic growth, including China and Europe.

There has been uncertainty about the reduction of the size of the Fed’s balance sheet, the process that started in October 2017. The Minutes has reduced this uncertainty by showing that almost all the members wanted a plan to stop the reduction later this year.

Yesterday’s meeting between the British prime minister and the president of the European Commission, Jean-Claude Juncker didn’t show any new progression about Brexit. The EU is now supposedly to be more open about the discussion of the backstop solution, and changes of the solution might be settled soon. On next Wednesday, the British Parliament will be voting on a new Brexit deal. If the EU is willing to change the backstop solution with Ireland, the probability of Brexit supporters in the Parliament to agree on the Brexit deal will be higher.

3 conservative members of the parliament (MPs) have resigned from their party and joined the Independent Group together with the 8(formerly 7) MPs from Labour party who resigned from their party earlier this week.

The trade talks between the US and Chinas continues. There was news about how the two parties were discussing some central issues for an agreement. Some of the issues were intellectual property rights and cybertheft.

Indices on the 21st of February: The US stock market was unchanged yesterday. Stronger than expected released economic indicators in China have made the Chinese indices ended in a gain.
Dow: +0.2% (20th of February )
S&P 500: +0.2% (20th of February)
Nasdaq: +0.1% (20th of February)
Nikkei: +0.2%  (21st of February)
Chinese indices: +1.6% (21st of February)
STOXX Europe 600 Index: -0.28% (21st of February)

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