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Raising rates again

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The minutes of the last US Federal Reserve policy meeting were compatible with the possibility of a March rate hike. The Fed is raising rates to try and keep things as they are, not to change economic direction. Markets do tend to underestimate policy moves, but two or three US rate hikes this year should not scare investors.
  • The madness never ends in the Eurozone, where more PMI opinion polls on business sentiment are due. The frequency of this data is part of the problem; "never mind the quality, look at the quantity" is the market response.
  • UK consumer credit data, including mortgage data, will be released. With the rise of self-employment, some consumer credit data may actually be funding investment. The blurring of corporate and consumer in data is a growing problem.
  • Politics may offer a little distraction for financial markets. Iran's Revolutionary Guards are taking measures to contain the recent protests there. In the US, allegations in a book about the Trump campaign are unlikely to impact markets. US President Trump's political capital in Washington is less economically important now the tax changes have passed. Investors will only care if the president's position is seen changing the mid-term elections.