A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.
Share this story:
Andrew Kositkun Foreign Exchange Head Trader
The most recent World Bank/International Monetary Fund (IMF) meeting ended this past weekend with a bit of a mixed tone.
The IMF cut its forecast for growth, as the organization took its global outlook down to its lowest level since the financial crisis due to a variety of factors including the impact of higher tariffs that weighed on trade. This downgrade marks the third time the IMF has downgraded its global outlook in the past six months.
However, there were also signs of optimism as the fund did see signs for a global economic recovery in the second half of the year. A dovish pivot from numerous central banks around the world have provided a supportive backdrop for economic growth, and the Chinese economy has shown signs of stabilizing with the IMF raising its forecast for Chinese growth by 0.1% to 6.3% this year.
To be sure, the projected rebound is an uneasy one with risks remaining skewed to the downside as concerns, including the possible collapse of trade talks between the U.S. and China and a no-deal Brexit, continue to weigh on the markets.
Significantly, growth risks extend beyond economic factors. President Trump has been a frequent critic of the Federal Reserve and attacked the Fed again this past weekend claiming that the Fed's policy has put a cap on the stock market as well as GDP growth.
The institutional independence for the Federal Reserve to do what it believes is necessary to support growth, unencumbered by political influence, is a cornerstone of the financial markets. The importance of credible independence was underscored not only by comments from Fed Chair Powell defending his institution's independence but also by comments from ECB President Draghi. At this past week's IMF meeting, Draghi stated that he was "certainly worried about central bank independence" and especially "in the most important jurisdiction in the world." These comments are particularly notable not only because central bankers are extremely hesitant to comment on politics or events in economies other than their own but also because it underscored how self-inflicted wounds are detrimental to the fragile global recovery.
HERE ARE THE KEY NEWS STORIES FROM OVERNIGHT:
The New York Fed's Empire State manufacturing survey beat expectations coming in at 10.1 against expectations for an 8.0 print. However, the index for future business conditions dropped 17 points to 12.4, the lowest level in more than three years.
The U.K. Parliament is in recess this week, providing a bit of a breather for the markets that have been inundated with Brexit headlines.
Multiple reports over the weekend continue to point to an imminent conclusion to the U.S.-China trade talks. Many in the markets are expecting a conclusion by the end of April/early May with the wildcard being what happens to existing tariffs.
Want to learn more about international finance, economics, and global events? Sign up for our other Foreign Exchange emails and videos!
Follow City National Bank on social media:
Non-deposit investment products:
Are not FDIC insured,
Are not deposits or other obligations of City National Bank and are not guaranteed by City National Bank, and
Are subject to investment risks, including possible loss of the principal invested.
This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. City National Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.
Here's what this indicator is saying about US stocks right now. ACTIVE INVESTOR WEEKLY EDITION: January 21, 2022 View in a browser FIDELITY VIEWPOINTS ® WEEKLY EDITION: January 21, 2022 Bollinger band stock signal Here's what this indicator is saying about US stocks right now. Read more CHART OF THE WEEK Inflation and corporate consolidation US industries have become
Learn how to keep all your accounts—not just the ones at Fidelity—secure. November 18, 2021 View in a browser FIDELITY VIEWPOINTS ® WEEKLY EDITION: November 18, 2021 What to do after a data breach Learn how to keep all your accounts—not just the ones at Fidelity—secure. Read more What's ahead for your RMDs Make sure to take your required withdrawals this year, then start to plan ahead.