💡Quote of the week
“So now we know. The minutes from the Federal Open Market Committee’s meeting at the beginning of this month, released Wednesday, reveal that the gathering was about as dull as many of us supposed.” John Authers, a senior editor for markets and Bloomberg Opinion columnist
🏦 Fed resolved to fight inflation. Fed officials remain committed to fighting inflation with more interest rate hikes despite signs of a reduction in price increases, according to meeting minutes released on Wednesday. (CNBC)
Although the Fed approved a smaller-than-usual rate hike in January, officials noted that inflation remained well above the target of 2%, while tight labor markets were leading to continued upward pressure on prices and wages.
The minutes stated that “substantially more evidence” of progress across a broader range of prices would be needed to be confident that inflation was on a sustained downward path, and that “ongoing” rate hikes would be necessary.
⭐Gold prices set to fall weekly with anticipation of more U.S. rate hikes. Gold prices are on track for another weekly drop as the U.S. Federal Reserve considers more interest rate hikes.
Strong economic data has also contributed to the decline, with gold down about 7% since the start of February.
📉 Dow plummets nearly 700 points in biggest drop of 2023. U.S. stocks fell sharply on Tuesday, with all indexes posting their worst day of the year so far. (CNBC)
The Dow Jones Industrial Average closed down 697.10 points, or 2.06%, while the S&P 500 slid 2.00%, and the tech-heavy Nasdaq Composite dropped by 2.50%. The decline was driven by worries about stubborn inflation, which could lead to higher interest rates and potentially tip the economy into recession.
🇹🇷 🇨🇭 Turkey's gold imports from Switzerland reach record highs. Turkey's demand for gold hit an all-time high in January, with Switzerland exporting the largest amount of gold on record to the country, according to Swiss customs data.
The surge in gold imports reflects Turkey's growing appetite for the precious metal amidst high inflation, currency devaluation, and economic instability.
While the recent earthquakes have prompted Turkey to take steps to curb rising gold imports, the country's central bank was the most prominent official buyer of gold in 2022, buying 148 tonnes, according to the World Gold Council data.
💡Learn more in our SPOTLIGHT: Central Banks Buying Gold: What’s Behind the Latest Surge?
🇬🇧 UK economy in “a lot better shape” than figures suggest. Schroders fund manager Andy Brough has suggested the UK's economy is holding up better than expected, despite figures showing that the country's GDP contracted by 0.5% in December. (CNBC)
“We’re seeing pretty good dividend increases, pretty good earnings statements, so, underlying, I think the economy is in a lot better shape,” Brough said.
🌎 Global outlook improving? Yellen, the US Treasury Secretary, spoke at a G-20 finance meeting in India and noted that the global economy is in a better place than predicted months ago. (Bloomberg)
“The challenges we face are real, and the future is always uncertain. But the outlook has improved since we gathered in the fall,” Yellen said, according to the text of her prepared remarks.
📸 Image of the week
🤔 A blast from the past: the geopolitical multiverse is back to two superpowers. If U.S. intelligence is right and China is about to arm Russia in its war against Ukraine, we may be on the brink of a perilous new chapter in international relations. (Bloomberg Opinion)
By supporting Russia militarily, China would turn the Ukrainian conflict into a proxy war between two hostile blocs, with a third trying to stay out.
Ukraine would get supplies from the U.S., Europe, and the geopolitical "West" - from Canada to Japan to Australia. Russia would be helped by China, Iran, North Korea, Belarus, and a few other states, collectively called the "East".
Meanwhile, most other countries - from India to Brazil and much of Africa - will be navigating between these camps.
What else is happening
🇷🇺 🇺🇸 Moscow halts nuke pact with U.S. Russian President Vladimir Putin said Moscow was suspending its participation in the New START treaty — the last remaining nuclear arms control pact with the U.S. — further heightening tensions with Washington over the fighting in Ukraine. (Bloomberg)
The Foreign Ministry said later that Moscow would continue to follow the treaty's weapons limits and participate in data exchanges, adding that Russia’s decision to suspend the treaty “can be reversible."
🇪🇺 The E.U.'s own digital currency. The European Central Bank is working on a digital currency as the region seeks to protect itself from tensions with the U.S. and China. (CNBC)
“The ECB is worried that the euro zone will end up in a geopolitical and economic sandwich position between the big tech companies of the US and the payment systems of China without a digital euro. Right now, Europe lacks digital platforms,” Guido Zimmermann, senior economist at German bank LBBW, said.
🌎 Journey to the Center of the Earth. Earth's deep interior has a wickedly hot, solid ball of iron and nickel about 800 miles (1,350 km) wide inside its core, according to a study of seismic waves from large earthquakes. (Reuters)
"I like to think about the inner core as a planet within the planet. Indeed, it is a solid ball, approximately the size of Pluto and a bit smaller than the moon," said Australian National University geophysicist and study co-author Hrvoje Tkalčić.
See you next week!