Anchor resume from 15 to 22 of September 2017

Anchor resume from 15 to 22 of September 2017

Ana Martínez

The Fed decided to move tab. Following the last meeting from the Federal Open Market Committee, more commonly known as FOMC, Janet Yellen pleased the markets by announcing the start of stimulus withdrawal in the US economy. Although interest rates remained within the range of [+1% - +1,25%], the door for further increases was left opened for the next meeting that will take place in December.

As she uses to, the Chair of the Board of Governors from the Federal Reserve maintained the vision of moderate growth in the economy and strength of the labor market. She also discarded negative effects of the hurricanes within the medium term. In this way, they growth forecasts for the current fiscal year 2017 had been increased to +2,4% from the +2,2% previously estimated, keeping inflation forecasts unchanged at +1,6%.

With all this, we have already started the process of withdrawal stimuli. We recall that currently the balance of the Federal Reserve reaches USD 4,25 Bill, so to carry out this process, the amounts invested in matured bonds will be withdrawn from the economy, starting with an amount of 10 billion dollars in order to reach 50 billion dollars per month.

Markets reacted positively, moving up to historical highs (S&P500 at levels of 2.500), while the Treasury TIR’s rebounded anticipating a rate hike before the end of the year. As for currency, although the evolution has been somewhat more volatile, the dollar managed to recover ground with its main pairs.

Last week was a bit more quiet for the Eurozone, we set special emphasis on the positive evolution of the recently published indicators. Economic activity maintained highly expansive rates (PMI Composite reached levels of 56,7 with respect to the 55,5 expected), supporting the improvement in the OECD growth forecasts for the region, now at +2,1% since the +1,8% previous. Likewise, the latest CPI data for August increased by +1,5% above forecasts of +1,4%.

In the Asian continent, however, have been somewhat more crowded. In order of importance, the event that had the hardest impact on the financial markets has been the reduction of China's rating by the credit rating agency Standard & Poors, which was motivated by greater financial and economic risks.

Nor should we forget the growing tensions with North Korea after the announcement of the country of an imminent trial with "unprecedented" nuclear weapons, a factor that turned down the main Asian selectives.

From Japan, although it had not major importance, we attended the last meeting from the Bank of Japan. As expected, the reference rates remained unchanged at -0,1% in the face of weak price developments. During the week we also heard the words from the Japanese prime minister (Abe) announcing his intention to call elections in October in order to strengthen his position, which was taken positively by the market.

Finally, commodity developments were somewhat mixed, as the ounce of gold became weakened by the announcement of a possible rate hike in the USA on December, the Barrel of Brent appear to be consolidating levels of 55 USD/Brent.

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