Just when it appeared that the reflation play was being reversed, the new US Administration managed to return its focus to pro-growth policy initiatives.
The outlook for China seems to have improved enough for them to raise short-term interest rates. In the wake of this general progression, growth-sensitive industrial commodities like crude oil and copper have already benefited.
It figures that just when it appeared as if positive equity market action and significant weakness in US Treasuries were about to confirm growth in the US economy, the US economic numbers turned sour.
Recent US economic data has shown some signs of improvement, with industrial production, housing starts and jobless claims all indicating positive progression.
US economic data continues to be disappointing, Trump and the GOP are trying to do everything at once, and they appear to be putting off tackling fiscal spending and tax reform in favor of wading into the quagmire of health care reform.
US data over the last several weeks have been disappointing, especially when one considers that the economy should have benefited from the holiday season.
Not surprisingly, the US Fed moved to hike interest rates last week, but the markets were somewhat surprised by the hint of three possible rate hikes in 2017.
The outlook for the global economy and commodity markets in general continues to improve, but some might fret over the looming FOMC rate decision, while others might be concerned over the prospect of a firming dollar in the event the Fed does make a move to hike rates.
As we mentioned several weeks ago, the steady rise in interest rates is soon to become an issue for a number of markets.
While the hype and equity market euphoria from the election has started to moderate, a shift in economic sentiment from inside and outside the US was already in motion, and that could allow for a “risk on” vibe until the markets get closer to the mid-December FOMC meeting.