By 
As expected, the Fed promised to be patient. The Federal Reserve is maintaining rates at 2.25%-2.50%. It said that due to the current economic uncertainties, it will remain patient regarding rate hikes. According to the Fedwatch tool of the CME Group, the probability of a rate increase was highest in September (21.8%) before the meeting, compared to only 4.5% today. But what we are seeing above all is that the probability of rate cuts is increasing (21.5% in January 2020) and the Fed has said it is flexible about reducing the size of its balance sheet (for the moment the decline is 50 billion per month): it could decide to put an end to this strategy and keep a balance sheet "larger than initially estimated" said Powell. During his speech, the Fed President took the opportunity to warn about the dangers for the economy of a new "shutdown".
The China/USA round of negotiations ended with a meeting between Liu He and Donald Trump. Chinese and American negotiators resumed their trade talks yesterday, face-to-face in Washington, and if no real consensus has been reached so far, they at least agree on one thing: the two countries must bury the hatchet. Steven Mnuchin said that "significant progress" in trade is expected, as well as more favorable market access between the two countries. But he added, in his interview with Fox Business, that the accusations against the Chinese giant Huawei had not been addressed. It's hard to believe. For his second and final day in Washington, the Chinese Vice Premier is scheduled to meet with Donald Trump. The latter said that if no agreement was reached before the end of the 90-day truce on March 1, he would increase tariffs on products imported from China.
Maduro wants to talk and Guaido called for a demonstration. Juan Guaido, who proclaimed himself President of Venezuela and has received the support of many countries around the world, calls for "more sanctions" against the dictator Maduro and intends to present today a plan to save his country from the economic and social crisis. Nicolas Maduro, who has said he is ready to organize early legislative elections and negotiate with the opposition and accuses his rival of preparing a coup d'état.
In other news. Chinese manufacturing activity continues to contract in January (to 49.5 in January, after reaching 49.4 in December, below the 50 threshold that distinguishes periods of contraction and expansion). Industrial production in Japan was better than expected: it fell by 0.1% in December, after a 1% decline in November. GDP contracted by 0.1% in Italy in the 4th quarter of 2018, the second consecutive quarter of decline. Preparations for the second Summit in late February between Donald Trump and Kim Jong-Un, the North Korean leader, are underway.
The China/USA round of negotiations ended with a meeting between Liu He and Donald Trump. Chinese and American negotiators resumed their trade talks yesterday, face-to-face in Washington, and if no real consensus has been reached so far, they at least agree on one thing: the two countries must bury the hatchet. Steven Mnuchin said that "significant progress" in trade is expected, as well as more favorable market access between the two countries. But he added, in his interview with Fox Business, that the accusations against the Chinese giant Huawei had not been addressed. It's hard to believe. For his second and final day in Washington, the Chinese Vice Premier is scheduled to meet with Donald Trump. The latter said that if no agreement was reached before the end of the 90-day truce on March 1, he would increase tariffs on products imported from China.
Maduro wants to talk and Guaido called for a demonstration. Juan Guaido, who proclaimed himself President of Venezuela and has received the support of many countries around the world, calls for "more sanctions" against the dictator Maduro and intends to present today a plan to save his country from the economic and social crisis. Nicolas Maduro, who has said he is ready to organize early legislative elections and negotiate with the opposition and accuses his rival of preparing a coup d'état.
In other news. Chinese manufacturing activity continues to contract in January (to 49.5 in January, after reaching 49.4 in December, below the 50 threshold that distinguishes periods of contraction and expansion). Industrial production in Japan was better than expected: it fell by 0.1% in December, after a 1% decline in November. GDP contracted by 0.1% in Italy in the 4th quarter of 2018, the second consecutive quarter of decline. Preparations for the second Summit in late February between Donald Trump and Kim Jong-Un, the North Korean leader, are underway.
