Daily update
Daily update
- The US Supreme Court holds hearings on whether Federal Reserve members can be suspended pending Department of Justice investigations. A ruling today is unlikely, but allowing such suspensions would critically damage perceptions of Fed independence. Tariff legality will not be decided for four weeks or more. If ultimately ruled illegal, the longer the delay the bigger the rebate (and the greater the US deficit increase).
- US President Trump is to speak at Davos. The president often gives quite strong and unusually wide ranging statements. However, investors’ focus may be less on Trump’s rhetoric and more on which parts of Trump’s remarks officials might actually seek to act upon.
- While media headlines have focused on “sell US” trades, this is misleading. It is not selling the stock of debt that creates a fiscal crisis, but the funding inflow. The UK’s Truss debacle and the Greek financial crisis were essentially funding problems. Reduced inflows rather than mass selling are the real risk. This distinction is relevant for the US (dependent on foreign funding flows) and Japan (domestically financed).
- European governments generally have limited ability to direct private capital flows. However, public opinion can be influential—as underlying investors can express views, and fund managers’ sentiment may be swayed by larger narratives.