Treasury yields – moving inversely to prices – rose this week, after Federal Reserve Chair Janet Yellen signalled that a March rate hike remains on the table. Equity markets climbed too, with the S&P 500 touching a new record high.
Strong fundamentals and a positive earnings season are providing market stability in an environment of rising political risks.
Again, Trump was dominating the news this week, but financial markets also moved their focus to increasing political tension in Europe, higher inflation expectations and the earnings season.
No changes were made to the overall asset allocation at the meeting of the Global Investment Committee on 26 January 2017.
Equity indices moved mostly sideways this week, ahead of the inauguration of Donald J. Trump as the 45th President of the United States. Bond markets retreated, with bond yields – moving inversely to prices – edging higher.
The sentiment in markets is positive, already since the end of 2016. Market sentiment is buoyed by growing confidence in global economic growth and the effect of a new president in the US who is focused on fiscal stimulus. Also, interest rates are not rising too quickly.
With one week to go until Donald Trump’s inauguration, markets are trying to figure out the details of the new administration’s economic plans. A look at Trump’s Cabinet picks may be insightful as far as trade policies are concerned.
Equity markets have had a good start to the year. While the number of trading days in 2017 can still be counted on one hand, it is a welcome contrast to 2016.
