Markets continue to grapple with the confluence of US policy and the S&P 500 hasn’t closed up or down by more than 1% in a single session since December 7th, writes Ian Slattery.
Stocks rallied as tax policy reform proposals from the new US administration came into focus, as President Trump stated on Thursday that he would announce a plan in the coming weeks to address the need for ‘fundamental comprehensive tax reform’ in the US.
US administration policy was a key focus throughout the week, as hopes rose that Trump’s ‘border adjustment tax’ would run into opposition in the Senate.
Markets continue to grapple with the confluence of US policy and the S&P 500 hasn’t closed up or down by more than 1% in a single session since December 7th.
Fixed income markets displayed caution in Europe, as bond investors focused on the upcoming elections in the Netherlands, with Marine Le Pen also garnering further attention in France.
Commodities were also broadly positive, as gold, silver and copper all moved higher. Oil grinded slightly higher and closed the week just short of $54/barrel.
Fixed income markets displayed caution in Europe, as bond investors focused on the upcoming elections in the Netherlands
The US 10-year bond rose during the week, with yields (which move inversely to price) moving from 2.46% to 2.41%.
The yield on the equivalent German Bund closed was lower, on the aforementioned political risk concerns, and moved from 0.41% to 0.32%.
The euro weakened versus the US Dollar, moving from 1.08 to 1.06 over the period, enhancing returns for Irish investors with holdings in the US. The euro/GBP rate closed the week at 0.85.
THE WEEK AHEAD
Tuesday February 14th
In Europe, the consensus estimate is for Q4 GDP growth to be confirmed 0.5% (quarter-on-quarter) and 1.8% (year-on-year).
Tuesday February 14th
In the UK inflation data for January will be published where the consensus forecasts a year-on-year rise of 1.9%.
Wednesday February 15th
US CPI data is also released this week, where the month-on-month figure is expected to come in at 0.3%, similar to the last reading, with the year-on-year figure expected at 1.8%, from 2.1% previously.
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