Market Action

• Thanks to a strong jobs report on Friday U.S. stocks rallied to end the week slightly positive. European equities declined sharply this week after a disappointing policy announcement from the ECB relative to expectations.
• The ECB lowered its main policy rate further into negative territory and now stands at -0.3%. The central bank also extended its bond-purchasing program an additional six months but markets were expecting more drastic action. As a result, the Euro climbed sharply while bonds sold off across the Continent.
• Janet Yellen laid out her clearest indications yet that the Fed will raise rates later this month. While the pace of rate increases is still uncertain the hike is expected throughout markets. Yields have climbed significantly on shorter maturities while stocks sold off during Yellen’s speech.
• The IMF completed its review of the SDR basket and agreed to include China’s yuan moving forward. The move is largely symbolic as more reform still needs to be done to internationalize the currency.
• OPEC held off on cutting production at its annual meeting in Vienna. Crude sold off after the decision. Saudi Arabia stated this week that it is open to cutting production but only if cuts also come from countries outside the cartel as well.
• Eight major U.S. banks were downgraded by S&P this week. The ratings agency ruled that new capital requirements made a fiscal backstop less likely in the case of a crisis.
• Impeachment proceedings began in Brazil this week against President Dilma Rousseff. The President is being charged with violating the nation’s fiscal laws in connection with the Petrobas scandal. An updated report this week stated that the level of fraud was several times larger than initially believed.

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