Last week, the Fed was in the spotlight, especially public appearances of its representatives. These turned out to be hawkish. For instance, Janet Yellen said that too long delay in the interest rates raise might be imprudent. As a result, the probability of further hawkish decisions increased. Nevertheless, there was still considerable market uncertainty associated with the announcements of Donald Trump. Investors waited for a specific project on the reform of the tax system and the first decisions on the infrastructure spending. After all, the condition of the American economy was really solid, so the market expectations concerning the interest rates raise seemed to be justified. The situation of the labor market was extremely good and the CPI increased to the highest level for five years – 2.5% y/y.

The past week was quite calm in the financial markets. The economic calendar was not rich and Donald Trump, who had recently delivered investors a lot of excitements, this time did not shake the markets. However, it is worth paying attention to the publication of the European Sentix index. The result of 17.4 pts. was in line with the market consensus. Investors learnt the US University of Michigan consumer confidence index. It stood at 95.7 pts. vs 97.8 pts. expected. The market focused on a speech of the ECB president, which turned out to be quite dovish. Mario Draghi said that the fate of QE was not a foregone conclusion and the ECB may continue ultra – expansionary monetary policy.

Last week, the American stock indices saw slight changes – the NASDAQ and the S&P500 rose by 0.1%, while the DJI fell by 0.1%. Moreover, dollar once more depreciated against euro. It should be emphasized that the latest macroeconomic data readings from the US economy ought to have supported local assets. High values of the manufacturing ISM index (56 pts.) and the PMI (55 pts.) confirmed optimistic moods in that sector. In addition, the payrolls exceeded market expectations. Despite the growth in the unemployment rate to 4.8%, the non – farm payrolls stood at 227K vs 175K projected. Furthermore, there was a meeting of the FOMC last week. In line with market consensus, the council did not make any changes in the monetary policy.

Weekly comment MM Prime TFI  - January 30, 2016

Last week, the economic calendar was extremely interesting. First and foremost, investors focused on the public appearance of Theresa May who announced “hard” Brexit. After all, the plan of leaving the EU by the Great Britain was rather positively assessed by the market. Thus, pound significantly appreciated against other foreign currencies. The meeting of the ECB Governing Council was another very important event last week. The council did not make any changes in the monetary policy. Moreover, Mario Draghi emphasized that the bank did not consider limiting the scope of QE - it was very good information for the stock markets. There was also a conference with the participation of Janet Yellen.