Right before the year-end, Powell Fed Chair is dismissed⁉ – Highlights and schedule for the week of December 24

◎ This Week's Highlights

1)A government partial shutdown and consideration of ousting Powell, the Fed chair

Last weekend, there was no consensus on the budget with President Trump and the Senate, and a provisional budget could not be passed. Since the weekend, some government agencies have been shut down. We are watching at what stage an agreement on the budget can be reached as the new week begins.

Also, there is shocking information that President Trump is considering dismissing Fed Chair Powell. We have not confirmed the details, but if true, it would be a serious matter. Appointment as Fed Chair requires congressional approval, so Trump cannot simply bring in someone convenient, but what is happening is problematic. There was a previous instance where President Erdogan of Turkey pressured the central bank (TCMB), delaying rate hikes and causing the lira to fall sharply. This issue concerns the independence of the central bank as well. We should watch for follow-up news.

2)A looming stock market crash

It is hard to tell due to different scales of up and down movements, but...

The 12-week drop during the Lehman collapse and the recent 12-week drop show almost no difference.

Does this mean the recent stock decline could be named “something shock” too!?

The VIX index has also closed above 30...#fx pic.twitter.com/HJV1L2obnk

— Okachan Man (@jn6gtz)December 22, 2018

As with the tweet above, the stock decline is gaining pace comparable to the Lehman era. The Nikkei futures have fallen below 20,000 and closed for the week. As year-end approaches, trading volume and participants thin out, so we will be watching whether a rebound can occur.

◎ This Week's Events Schedule

12/24 (Monday)

欧米 Christmas holidays
Japan: Emperor's Birthday

12/25 (Tuesday)

欧米 Christmas holidays

02:00　USD 2-year Treasury Note auction

12/26 (Wednesday)

08:50　JPYBank of Japan Monetary Policy Meeting Minutes
13:00　JPYKuroda, BOJ Governor, speaks

12/27 (Thursday)

00:00　USD Richmond Fed Manufacturing Index
03:00　USD 5-year Treasury Note auction
18:00　EURECB Monthly Report

12/28 (Friday)

00:00　USDConsumer Confidence Index
03:00　USD 7-year Treasury Note auction
08:50　JPYBOJ Monetary Policy Meeting Minutes, Main Opinions
17:00　EUR Spain HICP (Harmonized Index of Consumer Prices)
22:00　EUR Germany HICP (Harmonized Index of Consumer Prices)
22:30　USD Trade Balance

12/29 (Saturday)

01:00　USD Crude Oil Inventories
03:00　USD Baker Hughes Rig Count