Weekly Market Update


A mixed week for global assets, with the minutes of the US Federal Reserve’s last meeting causing some of the price volatility within markets. Many US Fed policymakers upped growth forecasts in January. Concerns about higher interest rates also resurfaced which pointed to a stronger economy, but also the increased likelihood of more rate hikes ahead. The news pushed the US dollar higher and sent the yield for the 10-year Treasury note to a fresh four-year peak of 2.95 per cent.

UK fourth quarter economic growth were revised down to 0.4 per cent, pushing the UK back down to the bottom of the G7 growth table in 2017, behind Italy. Meanwhile, wage growth remained at 2.5 per cent for the third consecutive month, still languishing below the 3 per cent rate of inflation. Though Bank of England governor Mark Carney has sounded quite bullish in his approach to raising interest rates this year, the latest reading shifts the landscape somewhat and proves that there are several hurdles to clear before he can pull the trigger.

Eurozone concerns over the weakness of the dollar were laid bare in a set of European Central Bank minutes that highlighted fears the Trump administration was deliberately trying to engage in currency wars. The account of the ECB’s January monetary policy meeting also reveals that its hawkish members pushed for a change in the bank’s communications, arguing economic conditions were now strong enough to drop a commitment to boost the quantitative easing programme.

The OECD highlighted their concern over the longer-term consequences of high public debt, as governments are set to increase borrowing from private investors this year for the first time in four years. The total stock of OECD countries’ sovereign debt has increased from $25tn in 2008 to more than $45tn this year.  Because much of the debt raised in the aftermath of the financial crisis is set to mature in the coming years, developed nations will have to refinance 40 per cent of their total debt stock in the next three years.

Finally, Venezuela became the first country to launch its own cryptocurrency, called the petro, a move President Nicolas Maduro celebrated as putting his country on the world’s technological forefront. Iran’s central bank also hinted it was developing a cryptocurrency that would be administered by the state government.

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