28th August 2018
Thankfully, global equities ignored all the legal drama in the US and ended the week marginally higher – giving us a break from what has been a difficult month.
However, while the minutes effectively reinforced their plan for four interest rate increases this year (making a September increase a done deal thanks to recent solid US economic data), I would not yet bet on a December increase as these minutes predate the recent turmoil in Turkey and other emerging markets.
In fact, I would not be surprised if we see a slight waning in policymakers’ conviction over the coming months, especially if the trade war intensifies – although tariffs provide upward pressure on inflation, they will hurt US business sentiment, investment spending and employment.
It is difficult to say if this week’s raft of “no-deal Brexit” documents from the UK government is good advice (albeit long overdue) given the lack of progress in negotiations to date, or whether it is a negotiating tactic (as it potentially strengthens Theresa May’s chances of winning support for more compromises and thus the chances of a soft Brexit).
We have a fairly skimpy week ahead in terms of economic data. The main highlights include: US PCE (the Fed’s preferred inflation measure); eurozone CPI and unemployment; Japanese CPI; and Chinese PMI.
Ian Copelin, Investment Management Expert*
*Ian Copelin is an Investment Director at Wealth at Work Limited which is a member of the Wealth at Work group of companies