Market Action

• In the week before a long anticipated Fed meeting markets calm relative to their recent actions over the past month. Data was mixed on the week, with Job openings suggesting labor market confidence but consumer sentiment disappointing. The data, combined with recent commentary by Governors, leaves economists and analysts with an unclear picture as to what the Fed will do next week.
• China reported a dramatic decline in its foreign exchange reserves this week. Investors and wealthy Chinese individuals have been moving capital in record droves out of China in light of falling markets and the Yuan’s devaluation.
• Germany posted much stronger than expected export data this week. The rise in exports of 2.4%, far above the 1% estimate, is a surprise given legitimate concerns of global demand.
• Canada’s economy posted considerably worse unemployment figures than most economists had expected. The decimation of energy prices has substantially devastated the Canadian economy but so has the increased manufacturing competitiveness of Mexico, where low wages and industrial productivity have brought global production from other countries.
• Standard and Poor’s stripped Brazil of its investment-grade credit rating on Thursday. The long awaited move pushed Brazil’s stock markets down over 7% in after hours trading.
• OPEC officials secretly hinted this week that members were becoming more pessimistic over global prices. Like many other institutions, the cartel expects oil prices to stay low far longer than their initial forecasts.
• The Bank of England chose to keep interest rates at current levels but debate within the Monetary Policy Committee is growing. Governor Mark Carney stated that worries over China were not impacting policy decisions, a potential clue into how other Western central banks were processing global volatility.

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