MM #128 – What will move markets in 2017

What will 2017 look like? We discuss monetary policy, politics and markets throughout the year. Some of the big changes seen in 2016 will spillover to 2017 with new challenges joining in. What’s next for currencies, stocks and commodities? We dive in: 

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  1. Politics taking over: Central banks might complete the transition from being the only game in town to playing second fiddle.
  2. Trump’s 100 days: The President-Elect promised so much. What will he deliver? The volume and character of his fiscal stimulus as well as trade policy stand out. How will the US dollar react?
  3. Fed path: Yes, Yellen and co. are data-dependent, but politics could play a growing role on policy now and policy in 2018, with potentially a new Chair at the helm.
  4. Europe’s big political shift: The ECB has already laid out its policy for 2017, so this front could be quiet in the first half of 2017. The elections in France are the biggest event, but we should watch out for developments in Germany as well.
  5. EUR/USD parity?: There is an open window, but it’s limited.
  6. Brexit – triggering Article 50: So far, the UK economy weathered the referendum, but 2017 will be different. This is when Article 50 is triggered. Is a weak pound good for Britain or not?
  7. Japan – Islands of stability: The BOJ is probably happy with the yen’s weakness against the dollar and the yuan, and maybe they’ll try not to push the envelope too far in 2017.
  8. China – currency manipulator?: Trump may label China for the wrong reasons, but this is probably meaningless. But China has other concerns: a big party congress, the question of a soft landing and internal debt.
  9. Oil prices: The black gold managed to stabilize late in 2016. Will this continue into 2017? Backwardation and contango come to mind.
  10. Unknown unknowns?: We can make all the predictions in the world, but unexpected events can surprise us. We quickly cover other countries and events.

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Trade safely!

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