Market Action

  • All eyes this week were tuned to Janet Yellen in Jackson Hole, Wyoming as the annual congregation of key central bankers concluded on Friday. The statement from the Chairwoman overall was neutral. Mario Draghi of the ECB stressed the limits of ECB influence without assistance from fiscal authorities.
  • With a strong earnings season and steady monetary policy behind it, equity markets posted strong gains in the U.S. this week. Stocks across the globe followed suit with the Nikkei recovering its losses from last week and Shanghai continuing a rapid rise despite data published suggesting a cooling property market and banks taking protective measures.
  • Despite the gains in their main stock indices Europe and Japan saw a marked depreciation in their currencies. Both regions face immediate structural impediments and bullish news from the U.S. is strengthening the dollar, welcomed news for both regions. German bunds remain below 1%.
  • Data on U.S. housing released this week sparked markets along with upbeat sentiment from Home Depot. Existing home sales came in stronger than anticipated and hit a 10 months high. The giant retailer meanwhile reported better than expected earnings and an optimistic voice on the state of the economy.
  • Bank of America reached a settlement with the U.S. Department of Justice and state regulators over shoddy mortgages and other products sold in the prior decade. Bank of America will pay a fine of $10 billion while providing $7 billion in consumer relief. Financials rallied at the news on the hope that settlements and government suits are in the rear view mirror.
  • The Federal Reserve Bank issued notices to Wall St. that banks should not consider the Fed’s discount window as being available when computing their living wills. The facility was a major tool in combating the thick of the 2008 credit meltdown.
  • Crude markets continue to be weighed down by domestic U.S. production and weak global demand for Brent. Libyan plans progressed this week to rapidly increase exports.

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