Morning Wire TV: Daily Market Snapshot (video)
Global equity markets largely followed the usual ‘Fed week’ script last week.
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That is, they rallied earlier in the week into the Fed meeting, and then pushed immediately higher on the Fed’s announcements (including the release of the updated ‘Summary of Economic Projections’, a.k.a. the ‘dot plots’). As soon as the news, though, was digested markets sold off sharply (i.e. on Thursday) before consolidating their losses on Friday. In other words it was typical forward looking behaviour, such that despite an uber dovish message from the Fed, markets sold off shortly after the announcements. The key question is, therefore: Where do markets go from here? What’s the likely aftermath, in terms of price action, this week?
There’s plenty of events for market participants to focus on this week. That includes more US housing data on Monday and Tuesday. Of late US housing data has been softening. Whether or not that continues is a key input into discerning the underlying strength of US economic momentum. Elsewhere Yellen and Powell give joint testimony on Capitol Hill on Tuesday and Wednesday. There’s a wide range of UK economic data released this week, including unemployment and average earnings (Tuesday), inflation & flash PMI readings (Wednesday) & retail sales (CBI survey on Thursday, official data on Friday). Elsewhere flash PMIs in Europe and the US will be a focus, while Eurozone M3 money supply (Thursday) & German IFO (Friday) are also both interesting.