21st June 2021
The Cambridge Weekly
Investors try to make sense of the Fed’s ‘dot-plot’
The biggest event of the week took place on Wednesday, as the US Federal Reserve (Fed) concluded its two-day Federal Open Markets Committee (FOMC) meeting, where it discussed economy policy and its latest projections on inflation and interest rates. Leading up to Wednesday, we were asking ourselves the question “what will the Fed change?”. In essence the choices were “nothing”, “a bit”, or “more than a bit”. All of us were somewhere between “nothing” and “a bit”. The Fed delivered “a bit”.
Yet the markets had some quite strong moves. The US Dollar rose sharply, by about 2% against most currencies. In bonds, the five-year yield rose to 0.88% from 0.75% and stayed there. The 30-year maturity bond rose to 2.22% but then reversed down to 2.10%.
Plenty to celebrate for China’s Communist Party
The Chinese Communist Party is about to turn 100. Celebrations and patriotic fervour are in store for the world’s most populous nation on 1st July, marking a century for the party which has ruled mainland China from 1949. It began in a small house in Shanghai, a house which now flanks the entrance to one of the swankiest shopping areas in the city.
We can expect all the frills that usually come with China’s important anniversaries: nationalistic broadcasts, emotive speeches from officials and – crucially – a tightening of the state’s grip on daily life. Censors on WeChat and other platforms will go into overdrive, police will be out in greater numbers, and public security staff will start taking their job a little more seriously (which, as anyone who has been on a Beijing subway would know, is not hard).
Japan’s latest corporate scandal bears traditional hallmarks
There are not many companies that embody their home countries quite like Toshiba. Founded nearly 150 years ago, the technology conglomerate has long been seen as a symbol of post-war Japan – big and sprawling, and with a technological prowess that lives up to its global reach. Today, very few would be flattered by that comparison – though it may well be just as accurate. After a bruising few years of scandal, the company that used to be one of the world’s most valuable hit a new low last week. An independent investigation, launched in March after shareholders revolted against the board, found that Toshiba’s management colluded with the Japanese government to suppress the rights of its large international investors.