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Powell Signals Fed is on Hold | Calm Before the Storm in Hong Kong

Published November 26, 2019

  • Federal Reserve Chairman Powell spoke last night in Rhode Island and didn’t offer specific commentary on US Monetary Policy.  He did, however, signal to the audience that US Monetary Policy is likely to be on hold for the foreseeable future, barring a material change in economic conditions. Powell also mentioned that some of the cautionary indicators the Fed is monitoring are muted inflation and a weaker manufacturing sector.  The comments were not followed by many reactions in the markets since they are in line with the recent tone and message coming out of the Fed.
  • After pro-democracy candidates scored landslide victories in this past weekend’s district council elections, the people of Hong Kong have sent a message to Beijing (and the world) that they aren’t going away quietly.  The vote had the largest turnout in Hong Kong history, and democratic candidates took 17 of 18 districts with relative ease.  The problem is that these elections are not going to have much influence over the political leadership of Hong Kong since those leaders are directly appointed by Beijing.  Some worry this might lead to both sides further digging in their heels, and this period of relative silence may just be the calm before the storm.
  • The British pound is one of the lowest performers among G10 currencies today (aside from the Swedish krona).  The GBP drop comes after the release of the Kantar poll, which showed the left-wing Labour Party has narrowed the lead of the Boris Johnson-led Conservatives.  The pound direction hinges on the UK December 12 election result, with a Conservative majority perceived as the most bullish scenario for GBP.

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