Market Action

• 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.

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