Minutes to the FED’s meeting last Wednesday revealed a discussion about the slow-inflation conundrum and concerns over weakening inflation expectations; a University of Michigan recent survey showed households expected the lowest inflation in half a century over the coming five years. The persistent shortfalls relative to their 2% target led FED officials to shelve their rate hiking plans for 2019, at least for now.
Trump suggested on Friday there was a “very good chance” the US and China would strike a deal. On Monday morning he twitted he will be “delaying the US increase in tariffs scheduled for March 1” and that assuming additional progress was made, they will be planning a Summit with President Xi. Equity futures and currencies like the AUD, NZD, CAD, EUR and GBP are all opening the week stronger versus the USD.
The market will be paying close attention to data prints coming out of the US this week. Data as of a late has been mixed, with strong labour data and mixed housing and capital investment data. Releases this week including GDP, Retail sales and Housing starts should allow markets, and the FED, to form a more complete idea surrounding the US outlook.