WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Speaking about the uncertain inflation outlook and implications for monetary policy in a keynote speech at the NABE meeting in Cleveland on Tuesday, the Fed Chair stressed that there are risks surrounding persistently easy policy and thus, “it would be imprudent to keep monetary policy on hold until inflation is back to 2%”. In reaction to an upward shift in short-term Fed rate hike expectations following Janet Yellen’s hawkish tone, UST yields moved higher and the USD was firmer across the board. Looking at the remainder of the day, focus is on a tax plan expected to be unveiled by the Treasury Department and Republicans before Congress.
GREECE: In an interview, the European Commissioner for Economic and Financial Affairs Pierre Moscovici stressed the importance of the conclusion of the 3rd programme review in the fourth quarter of 2017 so that the whole programme can then be successfully completed. The ECB is likely to conduct the stress tests for Greek banks in February 2018 in order to have them completed by May 2018 so that any decisions regarding the potential recapitalisation of Greek banks can be made before the programme expires, in August 2018.
SOUTH EASTERN EUROPE
CESEE MARKETS: Emerging market assets mostly traded on the back-foot earlier today as increased expectations for a Fed rate hike in December dented their high yield allure.