(28 NOVEMBER 2017)DAILY MARKET BRIEF 1:Lots of chatter from the US but little actions

The potential new head of the Fed confirmation hearing start today. Ahead of the Senate hearing on Tuesday Jerome Powell provided a clear statements indicted that his views were incline with current FOMC strategy. The statement indicated that Yellen’s policy path will be continue under Powell. He went on to stress that the Fed current institutional structured was positive and preserved its “independent and nonpartisan status”. Finally, he provided support for core banking rules such as minimum levels of liquid and capital, living will and stress testing.

Elsewhere, Fed speak was rampant on Monday. New York Fed President William Dudley indicated that he felt that inflation was below target. On the ultra-dovish side, Minneapolis Federal Reserve Bank President Neel Kashkari indicated that he was not comfortable hiking interest rate until inflation trend was on a clear path towards 2%. The USD was weaker on news that the Senate vote on the tax reform, which was scheduled to take place on Thursday, is falling short of support. Republicans occupies 52 seat however, two senators have indicated they will vote against the bill. In order to win support from the deficit hawks there is speculation that an automatic mechanism for higher taxes should revenue come up short. Passage of tax reforms should be marginally USD bullish as higher growth should pressure inflation.

By Peter Rosenstreich