Friday November 25, 2016 - 20:41:23 GMT
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United States Government In Transition
John M. Bland, MBA
Fed Chair Yellen Confirms Rate Hike
Markets are adjusting to the reality of a Trump Presidency, however a few of his second-tier opponents have started a campaign for a vote recount in a few of the key battleground states. These create a little uncertainty but are unlikely to change the overall results. At this juncture, Hillary Clinton is not behind the effort. Otherwise, President-elect Trump is working hard at hiring his new government. Under the U.S. system, most of the key jobs must be refilled when a new President is installed. Under them are full-time civil service technocrats who remain in place when a new government comes on the scene. Pundits like to scrutinize the new President's appointees to see politically where he is likely to govern from. So far, Trump appointees suggest he is moving more to the center than his campaign rhetoric might have indicated. This is a relief for many who had been fearing a confrontational administration from him. The President still will not be installed until Friday, January 20, 2017. President Obama remains completely in charge until that date. As For Fed Chair Yellen, her term runs until early 2018. At that time, the new President will appoint, with the approval of Congress, the next Fed Chair.
Markets have become more comfortable with the prospects for a Trump Presidency. This has seen the value of the USD and equities rise. Simultaneously, the economy was already starting to show increased signs of an improvement, and the Fed has been sending signals that it intends to raise its Fed Funds target by 25pb at its next meeting on November 14. Fed Funds Futures odds on a rate increase at that meeting are in excess of 100%. The increased prospects for monetary policy "normalization" has seen bond yields rising sharply. The 10-yr note has traded to above 2.40% from 1.87% on election day (November 8) before any results had been reported. Rising U.S. interest rates ahead of the Fed have been fueling the USD advance.
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The week ahead features the global final PMI indices for December. On Friday, U.S. and Canadian employment data for November will be released. The following Sunday will see the highly anticipated Italian consttutional referendum, which could be a trigger for the existing government to fall.
Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.
John M. Bland
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