Former FBI director to testify on June 8
Former FBI director James Comey is scheduled to testify before Congress on Thursday, June 8, 2017. It’s a big risk-off event that the markets have been anticipating. The fired director’s testimony could likely have an impact on Washington politics as well as the financial markets. One question Comey is expected to answer is whether President Trump requested him to stop the investigation of former national security advisor Michael Flynn’s possible ties with Russia.
According to recent reports, there won’t be any attempts by the White House to invoke executive privilege to stop Comey’s testimony. There could thus be no limits on what Comey may say in his testimony.
Previous market reaction to Comey news
The first time news came out about Comey’s memos was on May 16, 2017. The next day, major equity indexes such as the S&P 500 (SPY), the Dow Jones Industrial Average (DIA), and the DAX (VGK) sold off, falling nearly 2.0%. Safe havens rose in response to the news. The US dollar (UUP) weakened against all its trading partners, and U.S. Treasury bonds (BND) rallied as investors flocked to safe havens.
Will the markets run for safety?
What the markets do depends largely on Comey’s testimony. There’s a strong likelihood that it will be an intense examination. If discussions lead the markets to believe that Trump knew about any Russian interference in the elections, there could be another round of flights to safety since the markets have been driven by Trump reflation policies since the election.
In the next part of this series, we’ll look at the next big issue on Super Thursday: the UK elections.