Morning Update – 02/02/2017 – by Arjun Lakhanpal
February 2, 2017Morning all.. Wall St managed to just about stay in the green last night after we got little indication from the Fed. Asia on the other hand failed to hold and the Nikkei finished down 1.22% as the dollar drifted back down and US yields dipped. USDJPY making a low at 112.48 so far as JGB yields tick higher with no action from the BoJ.. The Fed unanimously voted unchanged (as expected) on rates and the statement suggested job gains remain solid, unemployment rate remained near recent low; consumer, business sentiment have improved lately; inflation increased in recent quarters, still below longer-run objective; expects inflation to rise to 2% over medium term; statement removes reference to transitory effects of oil, import prices; will reinvest principal payments from holdings until normalization rate is well under way; near-term risks to economy appear “roughly balanced”; expects economic conditions to evolve in way that warrants “only gradual increases” in Fed funds rate. Elsewhere the UK government easily won the Brexit Bill vote as expected and GBP remains bid in Asia after a strong session yesterday. On the data front CBI SME Trends: smaller manufacturers saw new orders grow at fastest rate in 2 years but price expectations rise to most since 1995.. We have the BoE rate setting meeting today and there is some concern over whether Carney will be forced to start preparing us for a hike as inflation rises. This morning we get Spanish unemployment, UK construction PMI, EU PPI and the BoE inflation report.. Good luck.
