Asian markets were the first to reflect the Fed’s move, shortly followed by a Chinese response. Earlier today the Peoples Bank of China also raised its base rate by 25bp from 1.50% to 1.75%. In a surprise move they also increase reverse repo rate and Medium Loan Facility by 5bp, in a move that could cool demand. Core markets opened positive but all finished the day on their lows. It will be interesting over the next couple of weeks, to watch China’s response to the US Tax reforms. As they turn from an export to a domestic lead economy the competition for trade will probably play out in the currency markets. In Japan the Nikkei saw a small -0.3% decline with financials and technology leading declines. The Yen continues to reflect the uncertainty as it flirts yet again with the 112 figure. The SENSEX was the one exception in Asia today closing +0.6% higher on the day and comfortably distancing itself from the psychological 33k level.

European markets ignored all central bank meetings today (SNB, BOE and ECB) as all were widely expected to announce no changes. However, it appears the Fed and the PBOC had already shaken markets as we saw declines in all markets from the opening bell. Core DAX, FTSE and CAC all lost around -0.6% whilst the peripheral (FTSE MIB, IBEX, etc.) all closed around 1% lower. Normally, at this time of the year you could put much of the recent moves down to profit-taking and position squaring ahead of year end, but considering many of the core European indices have only modest six month gains we are forced to take a more holistic overview. Possibly, the currency has taken much of the stock performance but unless both the currency and the asset are increasing there is no overall investor appetite; especially when considering the amount of cash that expanded the ECB’s balance sheet! It will be interesting to see year end numbers to predict a 2018 projection.

US traded light but heavy throughout the afternoon session. The treasury market also benefited from some of the flow as was shown via the return of the curve flattening. The corporate tax rate remains many traders core focus, and it is almost playing-out by the day. An cut down to 21% would certainly be beneficial for many companies, but the technology sector is probably the talk on the floor as benefiting most. On the data front, todays Retail numbers were outstanding and even with inflation invisible, in mainstream outlook, the US remains head and shoulders above its next competitor.