Big Week Ahead for Central Banks

June 12, 2017

Big Week Ahead for Central Banks Photo

Last Friday presented the first round of cracks in the stock market in recent memory. The technology heavy NASDAQ 100 Index suffered a 2.4% decline with many of the high fliers of this year, namely, the FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) seeing significantly larger declines. I will be watching this week to see if we have a continued correction or if buying comes in to support prices. So far this year, selloffs have been followed by significant ‘buy the dip’ action. On a positive note, bank shares performed well on expectations of further deregulation.

The nearly commonplace geopolitical uncertainties continue to make the global picture difficult to decipher. In the U.S., the Russia investigation continues to drag on, while election results in the U.K. resulted in a loss of control for Theresa May. Meanwhile, in the French election, Emmanuel Macron's party looks to take substantial control and make changes. I still believe these events are more noise and that the pro-growth policies across the globe warrant more of our attention.

Lastly, we’ll hear from four major central banks this week. A much anticipated increase of 25 basis points to the federal funds rate is expected to be announced after the Federal Reserve Bank in the U.S. ends a two day meeting on Wednesday. We will also hear policy decisions from the Bank of England, Bank of Japan and Swiss National Bank. I don't expect any significant policy surprises which will bode well for markets given the geopolitical uncertainty.

Tags: Monday Morning O'Malley | Federal Reserve | Monetary policy | Swiss National Bank (SNB) | Russia | Bank of Japan | Bank of England | Central banks | Federal Funds Rate

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