11 July 2017
Bassanese Bites: US Earnings to the Rescue? – Week beginning: 10 July 2017
Trepidation over the pace of central bank tightening remained the major global market theme last week – and the question of whether central banks tighten policy even if inflation remains below target is shaping up to become an important issue in coming months. Reflecting these concerns, bond yields pushed higher last week and equity markets continued their nervous consolidation.
Last week’s Fed minutes suggests it remains intent on raising rates at least once more this year and to start winding down its balance sheet. Notable within the minutes were growing “financial instability” concerns – suggesting that, despite low inflation, the still reasonable strength in the economy and risk of equity markets becoming too over valued could be enough justification to continue tightening policy. ….
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