Plan your strategies for the trading week ahead with key insights from our team.
Markets experienced a potential game-changer last week when the Federal Reserve mentioned shrinking its $4.5 trillion balance sheet for the first time. The Fed’s QE program which involved buying US treasuries and Mortgage-backed securities sent asset prices higher across the board. It stands to reason that selling those same bonds – or at least not reinvesting the ones that expire would send assets including stocks back down. The US dollar has so far fallen on the news because the Fed would likely pause its rate hikes while unwinding the balance sheet. The future pace of rate hikes and what the Fed does with its balance sheet will be an ongoing theme for markets this year.
Specifically this week there is a spate of Chinese economic data following last week’s meeting between US President Donald Trump and Chinese Premier Xi Jinping. Any threat to China’s economy typically has negative consequences for commodities like copper and the Aussie dollar.
UK inflation and unemployment data will be important for how the Bank of England weighs up the uncertainty of Brexit with a strong economy and higher prices.
Join Jasper Lawler and Rowena Harris-Doughty in the week ahead, as they discuss the Fed’s interest rate and balance sheet shrinking plans, China’s growth stability, Sterling and the Aussie dollar.