Earlier this week, Lawrence Summers, the former U.S. Treasury Secretary and Vice President of Development Economics and Chief Economist of the World Bank gave a grave warning at the European Central Bank conference in Portugal that developed nations are ill-equipped to deal with another recession, both politically and economically. He added that central banks should be cautious of raising interest rates to control inflation. As Summers puts it ‘The issue that’s preoccupied monetary policy for the generation before the financial crisis -- the avoidance of inflation -- is no longer the top issue’, believing that now the importance has shifted to the maintenance of sound growth and getting to full employment.

The Turkish lira remains under pressure, having lost over 20% against the dollar year-to-date, in fact, the lira is the worst performing currency so far this year according to Bloomberg’s “World Basket”. The weak lira is playing havoc with local businesses, which have started voicing their concerns over the inability to run day-to-day operations due to the currency’s volatility, and there are mounting fears of a debt crisis.

Every 10 seconds in China, the German car giant VW sells a car either though its own brands or one of its two joint ventures, SAIC Volkswagen or FAW-Volkswagen. To put in perspective the importance of China, not just to VW, but the global car industry, in 2017 VW delivered nearly 3.2m cars in China, out of a total of over 24m cars sold globally. The final total was  up nearly 6% year-on-year from 2016. Sales were up 13% in December alone, where the combined 3 companies sold nearly 342,000 cars, dwarfing the UK’s sales of just shy of 209,000 for the whole of 2017.

We’ve seen a fairly muted market response following the end of a relatively more hawkish FOMC meeting last night where, as largely priced in, the Fed hiked rates by 25bps, to 1.75%-2.00%. Of note, however, was the flattening of the UST curve, which saw the 2s10s spread fall below 40bps to September 2007 levels (at time of writing). Meanwhile, the dollar took a tumble; this could also be due to the reignition of US-China trade tensions which we expect to hear more on as both sides have said they will publish tariff lists as early as tomorrow.