Friday March 2, 2018 - 16:06:19 GMT
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Fed Chair Powell Takes A Mildly Hawkish Posture; Trump Tariff Gambit
Fed Chair Powell Takes A Mildly Hawkish Posture In Congressional Testimony
John M. Bland, MBA, co-founder, Global-View.com
Tuesday Powell House Testimony Seen Hawkish; Thursday A Bit Less So New Fed Chair Powell testified before the House on Tuesday and analysts walked away with the impression that his bias would be to hike rates two to three times after they raise the target range by 25bps later this month (March 21). His focus was on the new set of projections each member will be submitting at the March 21 meeting. He said that the board would be taking into account the improvement in the economy since December.
In his Thursday Senate testimony Powell said there has been no strong evidence of a decisive move higher in wages. He added that there are some areas of the labor market that are still seeing slack, including among prime-aged workers. Lastly he said that with regard to labor market, risks are much more two sided than they were a few years ago but he does expect to see more wage increases. The Chair concluded by taking the standard Yellen posture that gradual rate hikes are expected to be the appropriate monetary policy path.
On balance, I feel that Mr. Powell has left the door to a more hawkish future guidance in March after a rate hike at that meeting, but he has left the Fed room for leeway on future decisions based on future developments. In short, He has not been painted in a corner for future policy decisions.
Markets late Thursday and Friday reacted poorly to a threat by the Trump Administration to impose broad tariffs on steel and aluminum imports. The threat saw equities and the USD sell-off. Only time will tell whether this is bluster or if they will be imposed only temporarily as a negotiation ploy.
Italian National Elections on Sunday February 4 Markets have been waiting for the Italian general elections due this weekend. Polls have been in a blackout period, which started two weeks before the election date. Final polls before the blackout were seeing the center-right party in the lead, but most feel that an outright majority is improbable, so Italy will likely emerge with a coalition government. Market concern about the vote has been relatively muted, with immigration the major issue for voters. Reportedly, roughly 40% of voters are undecided. A lot will be dependent on voter turnout.
GVI Trading Calendar. Potential Price Risk Scale
AA: Major, A: High, B: Medium
Sun 4 Mar 2018
A Italian Elections
Mon 5 Mar 2018
A All Day final Service PMIs
Tue 6 Mar 2018
AA 3:30 AU- Reserve Bank Decision
Wed 7 Feb 2018
A 10:00 EZ- GDP
AA 13:15 US- ADP Payrolls
A 13:30 US- Productivity
AA 15:00 CA- Bank of Canada
A 15:30 US- EIA Crude
A 23:50 JP- GDP
Thu 8 Mar 2018
A 01:30 CN- CPI
AA 12:45 EZ- ECB Decision
A 13:30 US- Weekly Jobless
Fri 9 Mar 2018
A 03:00 JP- BOJ Decision
AA 09:30 GB- Ind/Mfg Output
AA 09:30 GB- Visible Trade
AA 13:30 US- Employment
AA 13:30 CA- Employment
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