WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: In line with market expectations, at its two-day monetary policy meeting that concluded late yesterday, the Fed decided to raise the federal funds rate by 25bps to 0.50%-0.75%. According to the Summary of Economic Projections (SEP), the “dots”, policy makers now pencil in three rate hikes in 2017, up from two in September. In reaction to above, the USD firmed across the board and US Treasury yields moved higher with short-dated notes underperforming.
GREECE: Greece’s official lenders were caught unawares last week when the Greek PM Alexis Tsipras announced a Christmas bonus entailing a one-off payout to low income pensioners and the postponement of a VAT increase in the refugee-hit islands. Although according to the Greek government the funds for these measures would be derived from the over-performance of this year’s budget, this decision was regarded as a unilateral action, contrary to the procedure provided for by the 3rd Economic Adjustment Programme. As a result, the ESM announced yesterday the temporary freeze of the short-term debt relief measures that were agreed at the December 5 Eurogroup until January 2017.
SOUTH EASTERN EUROPE
CESEE MARKETS: Emerging market assets came under pressure earlier on Thursday, after the Fed delivered yesterday a much anticipated 25bps hike, but signaled a more aggressive tightening pace next year.
Viewers can log herebelow and read the full report:Daily Overview December 15 2016