Besides the ongoing political shakeup in Washington, global financial markets were tuned in to the latest semiannual testimony from Federal Reserve Chairwoman Janet Yellen as she played a more hawkish policy tune. As evidenced by her remarks, the US Central Bank is concerned about waiting too long to normalize policy, indicating that the forthcoming March FOMC Meeting may be a “live” event where further rate hikes are discussed. Supporting this development were headline and core inflation figures reported by the US Census Bureau. Core inflation has now remained above the Fed’s 2.00% target for the last 15-months while the headline CPI index rose to 2.50%, marking the fastest pace of price growth since March of 2012.
Chinese inflation also topped expectations thanks to rising food prices while UK figures driven higher by increased fuel costs. However, weighing on sentiment in Europe were GDP figures that were revised lower or printed below expectations. While optimistic projections for 2017 and 2018 growth and inflation were published by the European Commission, it failed to move investors concerned by the political developments across the region. To cap off the week, US crude inventories touched a new record, suggesting that the global oil glut remains unsolved.