Monetary policy

President Trump has signalled he is close to announcing his choice of the next Fed Chairman, from a shortlist of five candidates.

With Janet Yellen’s term ending in February 2018, the sweepstakes for Federal Reserve (Fed) Chair is heating up. Media stories about who is favored are appearing with increasing frequency and attracting a lot of attention. Potential candidates are trying to raise their profiles and thereby increase their chances.

Short-Term Mispricing of Fed’s Intentions Unlikely to Be As Serious, This Time, Western Asset Predicts

In the US, the UK, Sweden and Canada, central bankers have taken on board an economic situation that is coming close to full employment, with a risk of overheating not of inflation, but rather of private debt and asset prices (real estate, equities).

We see further strength in Japanese equities after their recent rally, given an encouraging earnings outlook, relatively low valuations and a stable yen under Japan’s ultra-easy monetary policy.