Markets finally posted a positive week in the U.S. thanks to a combination of some promising earnings reports and global central banks maintaining easy policies. While stocks posted gains in most markets, bonds rallied as well.
Japan surprised markets on Friday by announcing it too would adopt negative rates on excess reserves. The Bank of Japan moved its policy rate to -10 bps on Friday and boosted global markets with it. The Yen fell on the week against the dollar. The move comes shortly after the dismissal of the country’s Economy Minister.
US GDP growth slowed sharply in Q4 based upon the initial estimates from the Commerce Department. The 0.7% reading came in below expectations. On Wednesday the Federal Reserve opted against an additional interest rate hike and articulated concerns regarding the impact of a wobbly global economy on the U.S.
France posted its strongest economic growth in three years. The Euro area’s second largest grew 1.1% in 2015 but the nation is still riddled with official unemployment north of 10%. Spain meanwhile grew 3.2%, one of the fastest on the continent.
Chinese stocks continued their sharp decline despite the People’s Bank of China pumping $51 billion into markets via reverse repurchase agreements. New reports suggest that capital outflows from China reached $1 Trillion in 2015 as growth slows.
Puerto Rico’s government is proposing two debt swaps to creditors in order to have more time to raise funds and reform the economy. One class of debt will pay a fixed rate while the other class will be tied to the health of the island’s economy.
Italy reached an agreement with the European Commission on its plan to create a bad bank and guarantee some bad debts. The limbo of negotiations had pummeled Italian banks in the markets and jeopardized future reform and growth efforts according to PM Renzi.