Fed minutes diminish near a term rate hike

Yesterday’s markets

18th February 2016

  • GBP Average Earnings Index 3m/y: 1.9%
  • GBP Claimant Count Change: -14.8K
  • GBP Unemployment Rate: 5.1%
  • USD Building Permits: 1.20M
  • USD PPI m/m: 0.1%
  • USD Core PPI m/m: 0.4%
  • USD Housing Starts: 1.10M
  • USD Capacity Utilization Rate: 77.1%
  • USD Industrial Production m/m: 0.9%
  • FOMC Meeting Minutes
  • USD FOMC Member Bullard Speaks

Yesterday saw the release of the minutes from January’s Fed meeting and had many policy makers agreeing that the financial outlook had become more clouded and uncertain. Fed members stated that they saw increasing risks facing the US economy. The start of 2016 has seen market turmoil erupt as China’s slowdown drove the prices of commodities down, such as the fall of oil prices. Members argued about these risks saying that it would be prudent and wait for further evidence of the strength of the economy before implementing another rate rise. As the Fed are still trying to understand the implications of the adverse changes to its financial conditions, job gains has seen steady gains. However, the overall outlook for the economic activity is still unclear and to increase rates too soon could have an adverse effect on the US economy. The bullish tone at the start of this year of four rate hikes has now changed very quickly, with the prospects of a near time increase almost off the table.

Other data released yesterday from the US saw Industrial production post a better than expected figure, with the January m/m rising to 0.9% which is the first monthly rise seen since July 2015.  From the UK, the Average earnings index came out as expected but was slightly down from the previous reading of 2.1% to 1.9%. This was followed by the Unemployment rate unexpected increasing to 5.1%.  As a result of this weaker data posted, Sterling was again on the back foot and saw declines against the greenback and the Euro throughout the day.

Today’s markets

17th February 2016

  • GBP MPC Member Cunliffe Speaks
  • ECB Monetary Policy Meeting Accounts
  • USD Philly Fed Manufacturing Index
  • USD Unemployment Claims
  • USD Crude Oil Inventories

Today, little high tier data will be released but the release of the last ECB meeting minutes will hit the wires. Much like the Fed minutes from last night, this will give a more detailed outline of how all the members see the current economic outlook, plus who deems it plausible for more action to be implemented. From the US, the weekly jobless claims is released, followed by the Philly Fed Manufacturing gauge.