Market Review – Fundamental Perspective 9 January 2018

Most markets were relatively unchanged yesterday in a quiet day for economic data. The S&P 500 rose by ~0.2% and Asian equity markets are generally higher as of midday local time today.
JPY strengthened overnight amid speculation that the BoJ has taken another step towards policy normalization by reducing purchases of bonds with 10+ years maturities.
PM May’s cabinet reshuffle did not go as smoothly as the PM had wanted after both Health Secretary Jeremy Hunt and Education Secretary Justine Greening initially rejected the proposed moves. Hunt will instead remain in his current role whilst Greening quit the Government altogether.
The outcome of the reshuffle raises concerns over May’s credibility and calls into question her ability to tackle the ongoing Brexit negotiations.
According to Bloomberg reports, China’s central bank has changed the way it calculates its daily CNY fixing thereby effectively removing the “counter-cyclical factor” which was seen as a tool for the bank to be more ‘hands on’ with the fixing.
USDCNH and USDCNY rose on the report as it could mean a higher fixing in the near-term
Recent economic data from Germany has been mixed as November factory orders came in weaker than expected at 0.4%, but industrial production and export numbers beat their estimates.
While this could be the first sign of an economic impact from Germany’s political uncertainty, the drop in yesterday’s factory orders is small and the global economic recovery should continue to support the German economy.

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