U.S. markets remained largely flat on the week as investors take a pause on the rally of the past several weeks. Volatility continues to stay muted as well.
The Federal Reserve raised interest rates as expected this week. Members of the Fed are projecting up to 4 rate increases for 2017 but markets are skeptical, pricing in no more than 2.
The dollar reached a 14-year high against the Euro and a basket of other currencies following the Fed rate increase. The dollar’s rise has had mixed results internationally, with emerging market stocks and currencies struggling but the Nikkei rallying 8 straight days.
Japan is now the largest holder of U.S. bonds as China has been using reserves to support its currency. China’s holdings are at a six-year low.
A slew of economic data out of China came in better than expected. Retail sales rose 11% as the Chinese consumer is keeping the economy afloat. Fixed asset investment and industrial activity also showed improvement.
Gold has fallen 17% since its high in July on the heels of the Brexit vote. The metal sold off sharply following the Fed’s rate increase and is approaching a bear market.
In an effort to tackle deep fiscal imbalances Brazil has passed a constitutional measure to freeze spending for nearly two decades. President Temer pushed for the law amidst his own legal troubles.