Market Update: Wednesday, March 21, 2018

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Daily Insights

  • Fed Chair Powell set to announce first rate decision. A hike today (announcement at 2 p.m. ET) is fully priced in as measured by fed fund futures. However, there is much debate about whether the committee will raise its policy guidance for the year to four hikes and if enough officials will shift their outlooks to lift the median rate projection. We expect the Federal Reserve (Fed) to keep its rate outlook unchanged and maintain its gradual pace, at three hikes in 2018, despite increasing its economic projections; but we will be looking for signals of a potentially more aggressive approach.

  • A positive trade development. Trade news has been negative lately, but we got a little positive news yesterday. Several outlets are reporting that the Trump administration dropped the requirement that vehicles imported from Canada and Mexico have at least 50% American content, helping to move NAFTA renegotiations forward. Markets responded with a stronger Mexican peso and Canadian dollar. The administration also reportedly walked back its initial demand of $60 billion in China tariffs to $30 billion, along with news that tariffs will not be imposed immediately. A formal announcement is expected tomorrow. The president’s tendency to moderate initial demands bodes well for eventual policies markets can manage, though trade remains our biggest near-term market risk.

  • Government shutdown still possible but less likely. The House spending bill to fund the government through October may not be voted on until Friday. This gives the Senate just until the end of the day to pass, which introduces the potential for a short-term shutdown. Regardless, markets are typically unfazed by short-term government shutdowns, and in this case there’s no major concern that it will become extended. The latest headlines this morning suggest an agreement is imminent and will include funding for border security, opioid addiction, and a Hudson, New York rail.

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Wednesday

Thursday

  • Weekly Jobless Claims (Mar 17)
  • FHFA House Price Index (Jan)
  • Markit Mfg. & Services PMI (Mar)
  • LEI (Leading Index) (Feb)
  • Kansas City Fed Mfg. Activity (Mar)
  • France: Markit France Mfg. & Services PMI (Mar)
  • Germany: Markit Germany Mfg. & Services PMI (Mar)
  • Eurozone: Markit Eurozone Mfg. & Services PMI (Mar)
  • Germany: IFO (Mar)
  • Eurozone: Current Account Balance (Jan)
  • Italy: Current Account Balance (Jan)
  • UK: Retail Sales (Feb)
  • ECB: Publishes Economic Bulletin
  • BOE: Bank Rate
  • BOE: Asset Purchase Target
  • BOJ: Outright Bond Purchase
  • Bank of Canada: Wilkins
  • Japan: All Industry Activity Index (Jan)
  • Japan: CPI (Feb)

Friday

  • Durable Goods Orders (Feb)
  • Cap Goods Shipments & Orders (Feb)
  • New Home Sales (Feb)
  • Revisions: Industrial Production & Capacity Utilization
  • Bostic (Dove)
  • Kashkari (Dove)
  • Canada: Retail Sales (Jan)
  • Canada: CPI (Feb)
  • Bank of Russia: Key Rate
  • Bank of Russia: Nabiullina

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