fundamental_images_8European and US equity markets closed essentially flat. Asian bourses are trading up. The S&P 500 closed up 0.15%, which drove down its derived measure of implied volatility, the VIX index to 14.88, which is the lowest level since October 2018. The volatility index is often used as a barometer of market anxiety. Treasury yields fell across the curve with the long end underperforming. Elections driving trade results. Bernie Sanders announced he will run in the 2020 U.S. presidential race. The beginning of presidential election campaigning is a key driver towards a deal in trade negotiations between the US and China.

Prime Minister Theresa May heads for Brussels today to deal with Juncker. Her trip follows yet another defeat, as there was no support for her Brexit statement (the hard Brexiteers abstained). While the vote was only indicative and not legally-binding, it has probably made life more difficult for May, as she no longer can show she has a united party behind her. EU is not willing to negotiate and make concessions if they do not know whether it will be enough. May has promised another vote by the end of February but she is unlikely to have anything new to bring forward then.

The main event today will be the release of the FOMC meeting minutes in the US. We will be interested to hear the different stances within the Fed on further hikes now it has hinted it is ‘patient’ about raising rates again. Furthermore, we will monitor any insights it might have on how it plans the balance sheet reduction.