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Date: October 16, 2017
Global stock markets this week rose to record highs amid various economic releases reiterating global economic strength and multiple geopolitical developments including Catalonia crisis, rising tensions between US and Iran, upcoming elections in Europe and Japan. Particularly, US stocks climbed to record highs and 10-year treasuries rallied after a core inflation reading slowed, adding to evidence that economic growth continues apace without stoking price increases. The hurricane-driven boost to the US cost of living in September fell short of projections, as the September CPI rose 0.5% month on month. The less volatile core CPI rose 0.1% month on month, following 0.2% gain; up 1.7% year on year. Another Commerce Department consumer-inflation measure, preferred by the Fed, is running below the central bank’s 2% target, with a 1.4% gain in the 12 months through August.
Date: October 9, 2017
Just as positive economic releases were bolstering confidence in global economic strength, markets again changed course as geopolitical tensions returned with a Russian news agency reporting that North Korea may test a missile this weekend. This dampened demand for risk assets and led a rally in safe havens. The CBOE Volatility Index rose 10%, the most in a month, after closing at a record low Thursday. Earlier in the week, global shares were on firm footing, amid strengthening economic data. US investors also considered the prospects that Congress will enact a pro-growth tax plan and ongoing speculation that President Donald Trump will opt for a Fed Chair who might pursue more aggressive policy tightening.
Date: September 26, 2017
The major event earlier in the week was the Fed policy meet. The central bank stood pat on the interest rate and continues to forecast a hike by year end, saying hurricane damage won’t derail an otherwise healthy expansion. This caught markets by surprise, as can be reflected in the implied probabilities of an interest rate hike in December, which jumped from near 20% to above 60% in a matter of minutes. In the statement, the Fed set October for the start of their previously announced plan to shrink its $4.5 trillion balance sheet becoming the first central bank in history to reduce its QE program. Officials announced the reduction process will start next month at a pace of $10 billion a month, which will gradually increase to $30 billion a month. This would take over 30 years to finalize the process.
Date: September 18, 2017
Fears that North Korea may launch another missile test on its founding day waned as the country choose to issue threats against the US ahead of a vote in the United Nations on further sanctions. North Korea threatened to sink Japan into the sea with a nuclear strike and turn the US into ashes and darkness for agreeing to the latest UN sanctions. This did not preclude the UN member nations to intensify the protest against North Korea as the United Nations placed further sanctions.
Date: September 11, 2017
Markets pursued a risk off approach with havens including gold and the yen rallied as North Korea tensions and natural disasters unsettled investors. The Trump administration is seeking to ratchet up pressure on North Korea after the country tested what it claimed was a hydrogen bomb on Sunday, following several successful tests of ballistic missiles with intercontinental range. The geopolitical threat lingers as it is widely anticipated that Pyongyang may test a missile this weekend to coincide with its founding day on Sept. 9. President Donald Trump stated it’s not inevitable that the US will wind up in a war with North Korea over its continued development of nuclear weapons, though military action remains an option.
Date: September 4, 2017
The week started with renewed geopolitical tensions after reports that North Korean fired a missile over Japan. President Trump said that all options are under consideration in response to the latest provocation. The United Nations stated that it strongly condemns the action, but did not seek to escalate sanctions against the Pyongyang regime. The initial market reaction to the test was a sharp rush into haven assets, which saw the yen and gold rallying, while the yield on 10-year U.S. Treasuries dropped below 2.1% for the first time since November.
Date: August 28, 2017
There was little top-tier economic data out this week with much of the attention towards this year’s economic symposium in Jackson Hole, Wyoming. The two major Central bankers whom are expected to speak were Janet Yellen from Fed and ECB’s Mario Draghi. While Mario Draghi is due to give his speech, Yellen delivered a less hawkish tone than expected.
Date: August 22, 2017
Markets are settling down after a tumultuous few days spurred after terrorist attack in Barcelona, policy paralysis seen in the US and lingering tensions over North Korea. President Donald Trump is facing growing criticism within his own party for remarks equating neo-Nazis to counter-protesters in Virginia. In a heated press conference on Tuesday, he also criticized CEOs who are quitting his advisory council. Speculation that President Trump’s top economic aide Gary Cohn, was poised to resign also contributed to the market roil Thursday as US stocks plunged 1.5%. Traditional havens including gold and the yen gained with core bonds across the euro region, and the dollar weakened. Later reports that he’d opted to stay on board brought some market calm. Cohn has been leading the president’s efforts on tax reform.
Date: August 14, 2017
Markets started to stabilize by Friday after US-North Korea tension rattled global assets, as investors were seen switching to risk-off mode, with gold, bonds and the yen all rising. President Trump stepped up his campaign of pressure on North Korea, promising a response to any strike against America or its allies. It has shaken global markets, a sell-off was seen in Asia. The CBOE Volatility Index climbed to the highest level since Trump’s election victory, while gold hit a two-month high. While Korea tensions still remain in focus, US stocks halted a three-day slide, volatility eased and Treasuries slipped.