The minutes of the January meeting of Federal Reserve policymakers, released this week, give a synopsis of what the Fed staff had to say about the gyrations in European markets over Greece and about the impact of the Chinese central banks efforts to restrain lending there.
On Greece: Mounting fiscal concerns made investors more reluctant to hold debt issued by the Greek government; sovereign yields rose in Greece and, to a lesser extent, in several other countries where fiscal issues have raised concerns among investors.
On European banks: European financial stocks declined substantially, as early profit reports for the fourth quarter from a few banks rekindled some concerns about the health of the banking system.
On the dollar: The broad nominal index of the foreign exchange value of the dollar rose reportedly reflecting a growing perception that U.S. growth prospects were better than those in Europe and Japan.
On China: Concerns that policy tightening by China might restrain the global recovery also may have contributed to the dollar’s appreciation against many currencies late in the period.