Incisive market commentary from David Morrison

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AM Bulletin: Markets rise for the second day ; back to pre-referendum levels, sterling still weak
30 Jun 2016
AM Bulletin: Confidence returns – but for how long?
29 Jun 2016
AM Bulletin: The onslaught continues – and we’re not just talking the football
28 Jun 2016
Weekly Bulletin: Investors rattled by Brexit vote
27 Jun 2016
PM Bulletin: Brexit - Referendum fallout
24 Jun 2016
AM Bulletin: We’re out! And so is Cameron
24 Jun 2016
Video Update: #AskSpreadCo - EU referendum
23 Jun 2016
AM Bulletin: Markets on tenterhooks ahead of UK vote
23 Jun 2016
Spread Betting Tips
22 Jun 2016
AM Bulletin: Risk assets waft higher
22 Jun 2016
PM Bulletin:Referendum and Market Reaction
21 Jun 2016
PM Bulletin: Gold and the referendum
21 Jun 2016
AM Bulletin: Yellen testimony in focus
21 Jun 2016
PM Bulletin: Janet Yellen’s testimony
20 Jun 2016
Weekly Bulletin: It’s all about the referendum
20 Jun 2016
Market Info Update: EU Referendum Margin Changes - CFDs
17 Jun 2016
Market Info Update: EU Referendum Margin Changes - Spread Betting
17 Jun 2016
PM Bulletin: Forecasting the referendum result
17 Jun 2016
AM Bulletin: Central banks leave rates unchanged
17 Jun 2016
PM Bulletin: FOMC post-mortem
16 Jun 2016
AM Bulletin: Yen, precious metals soar post FOMC/BOJ
16 Jun 2016
PM Bulletin: FOMC look-ahead
15 Jun 2016
AM Bulletin: FOMC meeting ahead
15 Jun 2016
PM Bulletin: European equities slide
14 Jun 2016
AM Bulletin: Stocks down on oil, growth fears and UK referendum
14 Jun 2016
Weekly Bulletin: FOMC and BOJ meetings in focus
13 Jun 2016
PM Bulletin: Markets rattled by slide in bond yields
10 Jun 2016
AM Bulletin: European stock indices drift lower
10 Jun 2016
PM Bulletin: WTI at $50 – thoughts on US production
09 Jun 2016
AM Bulletin: Precious metals soar
09 Jun 2016
PM Bulletin: S&P closes in on all-time high
08 Jun 2016
AM Bulletin: Investors in limbo ahead of Fed and UK vote
08 Jun 2016
PM Bulletin: Yellen and the jobs data
07 Jun 2016
PM Bulletin: Fresh polls send sterling lower
06 Jun 2016
Weekly Bulletin: Rate hike? What rate hike?
06 Jun 2016
PM Bulletin: A dismal Non-Farm Payroll number
03 Jun 2016
AM Bulletin: Non-Farm Payroll Friday
03 Jun 2016
PM Bulletin: Non-Farm Payrolls look-ahead
02 Jun 2016
AM Bulletin: OPEC, ECB, key data releases and central bank speakers
02 Jun 2016
PM Bulletin: OPEC and the oil price
01 Jun 2016
AM Bulletin: Manufacturing PMIs in focus
01 Jun 2016
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There’s no doubt that Thursday’s UK referendum vote on EU membership is pivotal. Whatever the result come Friday things will be different and we will adjust accordingly. The political landscape will shift – possibly quite dramatically and markets will reset to the fresh reality. This could happen quickly if the vote is a clear win for “Remain” or longer for “Leave” as the various options are discussed and negotiations take place. But unless there’s a dead-heat at least we’ll be able to refocus on the global economic situation with the uncertainty of the referendum outcome behind us.
With that in mind we have to consider the upcoming testimony of US Federal Reserve Chairman Janet Yellen on Tuesday and Wednesday. Tomorrow Dr Yellen will testify on the semi-annual Monetary Policy Report before the Senate Banking Committee. On Wednesday she testifies before the House Financial Services Committee. These are important events as Dr Yellen will face questions from both sets of committee members which may cover areas of monetary policy that she’d rather not answer. The Fed Chair came in for a load of criticism recently when she gave a garbled response when asked about the Fed’s credibility. She may get picked up on this over the next couple of days. 
Last week saw the central bank keep monetary policy unchanged while lowering its economic growth forecasts for 2016 and 2017. In the subsequent press conference Dr Yellen cited weaker employment data together with concerns over the possibility of a Brexit as reasons for keeping rates unchanged. Fortunately, the Fed Chair will still be able to use the UK referendum as cover for the central bank’s unwillingness to hike rates. However, there may be some issues which she will find more difficult to duck. High amongst these may be the constant flip-flopping on rate expectations from members of the Federal Reserve. In years gone by it was the job of central bankers to gently guide users of the financial system and help provide stability and a degree of certainty over the outlook for monetary policy. Now we go from one meeting to another parsing statements and minutes - delving for evidence of hawkishness or dovishness. The question has to be, is this intentional (which would be bad enough) or is the Fed genuinely clueless about what to do next (which would be worse)? 
I doubt that Dr Yellen’s inquisitors will be openly hostile. I also doubt that she will be accused of behaving like an inconsistent girlfriend like BOE Governor Mark Carney was once called an “unreliable boyfriend” as he gave out contradictory signals on monetary policy. However, it will be interesting how she squares an upbeat view of the US economy with reluctance to tighten monetary policy.    
David: Now we go from one meeting to another parsing statements and minutes - delving for evidence of hawkishness or dovishness.
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Posted by David Morrison

Category: PM Bulletin

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