Market participants are relieved by the Fed Chairman's latest comments. However, the pre-Christmas mood triggered by Jerome Powell is being capped by the tensions in the trade dispute between the US and China. As long as the trade conflict between the world's two largest economies remains unresolved, not even an increasing interest rate cut fantasy can fully offset the ongoing uncertainty on the markets.
In a generally thin economic data calendar, however, there could always be potential stimuli.
DAX
Fed Chairman Jerome Powell feeds interest rate cut fantasies in the USA
According to the Fed Chairman, the US economy appears robust despite the weak signals from the labor market. He referred to data published before the government shutdown, which indicated a more stable growth trajectory. In his opinion, however, there is „no risk-free path“ for monetary policy. At the same time, he said that wage growth had „slowed sharply“, which could probably be partly explained by lower employment growth, Powell said on Tuesday evening in Philadelphia.
„We will set our monetary policy based on the development of the economic outlook and risk devaluation rather than following a predetermined path,“ it continued.
Trade disputes between the USA and China not off the table - uncertainty likely to remain
The smouldering trade dispute between the US and China is also likely to continue to occupy investors. The US and China imposed new port fees for cargo ships on Tuesday, which is likely to have escalated the conflict. It was only on Friday that US President Donald Trump threatened to impose tariffs of 100 percent on Chinese imports. On Sunday, however, he struck a more conciliatory tone again. According to him, the USA wanted to „help China, not hurt it“. „Don't worry about China, everything will be fine. The highly respected President Xi just had a bad moment“, Trump said. The Chinese Ministry of Commerce in turn stated that Trump's tariff announcement was a „typical example of double standards“. „Threatening high tariffs at every opportunity is not the right approach in dealing with China,“ it said.
Publication of US inflation data postponed - publication of further economic data unclear
The publication of fresh US inflation data was actually scheduled for this Wednesday, but has been postponed to Friday, October 24. According to media reports, the publication of US retail sales and producer prices on Thursday and industrial production data on Friday remain unclear.
Speeches by Fed representatives such as Stephen Miran (3:00 pm and 10:15 pm), Michael Barr (3:00 pm) and Christopher Waller (3:00 pm) as well as Michelle Bowman (4:00 pm) could always provide important impetus on Thursday.
US reporting season could also provide impetus here in Germany
Today, Wednesday, attention will also continue to focus on the publication of quarterly figures in the USA. In addition to the results for the past financial quarter from Bank of America (ISIN: US0605051046), Morgan Stanley (ISIN: US6174464486) is expected to release its figures.
