Market Action

• Equities continued to march higher this week amid hopes for a lighter tax and regulatory regime in the future administration.
• Japan’s monetary authorities announced a plan to buy unlimited amounts of 10-year bonds at fixed rates on Friday. Yields had finally turned positive on benchmark bonds before turning south with the announcement.
• Mexico raised interest rates to their highest point in seven years this week. With the election of Donald Trump and his protectionist rhetoric the peso has fallen drastically.
• India’s sudden removal of large banknotes to curb corruption and black market dealings is having a disproportionate effect on tourists and the country’s poorest citizens according to news outlets.
• Janet Yellen stopped short of saying that a rate increase was coming next month but her quote that a hike could be “appropriate relatively soon” sent yields climbing for another week.
• The dollar continued its rise this week over both developed and emerging currencies. The greenback has posted gains for ten consecutive days against the Euro while higher bond yields in the U.S. is drawing capital from developing economies.
• Japanese GDP growth in Q2 was much higher than expected, growing an annualized 2.2%. Underlying trends in spending and capital investment however remain flat.

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