11 to 17 February: Markets’ focus may shift to Fed policymakers this week

Although the global economic diary does not contain too many relevant datapoints for this week, financial markets will probably not be bored, as the Federal Reserve will provide more than enough information to digest. Those investors, who seek clarity on the Fed’s monetary policy (especially on the balance sheet run-off), will probably be happy to read the FOMC minutes from January on Wednesday. Furthermore, between Tuesday and Friday, there will be a plethora of speeches by Fed policymakers, who are expected to provide guidance on the how members of the FOMC think. Amongst many others, investors want to hear answers to questions, such as the terminal size of the Fed’s balance sheet, the asset mix (Treasuries vs. MBSs) and duration. Should the prevailing information be of dovish nature, appetite for risk assets could further strengthen, most likely translating into EM asset price gains.

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