Last week was billed as uneventful, although in practice, it was anything but…
The US-North Korea summit appears to have been a success, albeit light on detail at this stage. President Trump and Kim Jong-un signed a two-page document committing to the complete denuclearisation of the Korean Peninsula. Trump later confirmed that the US would suspend military exercises with South Korea but confirmed troops are set to remain in the peninsula and could be redeployed if denuclearisation talks breakdown. In other US-related news, The Fed, as expected, raised rates by 25bps.
The UK made progress in relation to Brexit by winning a crucial vote in the House of Commons. The lower house rejected an amendment put forward by the upper house which would have meant that the UK government would have to accept the direction of Parliament if no deal was reached with the EU27. However, this was not without compromise; to win the vote Parliament were offered significant influence/oversight over negotiations which means we are likely heading towards a softer Brexit. UK unemployment data for April also remained steady at 4.20%.
Playing catch-up with other Central Banks, the ECB announced their intention to end QE by December 2018. The ECB are currently buying €30bn of assets per month but will reduce this to €15bn from September with purchases expected to cease at year end. Interest rates are expected to remain unchanged until mid-2019 with President Draghi confirming that this is subject to change at any time if risks to the economy materialise. Unsurprisingly, the Euro fell notably against the Dollar and less so against Sterling.
