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May tighten, will tighten, are already tightening?

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  • The US FOMC minutes said "some" (implicitly a minority) of the members wanted to end bond purchases this year. Of course the Fed would only end the policy if it was appropriate to do so, and it could be argued that (as the balance sheet: GDP ratio has declined) the Fed has already tightened liquidity.
  • The US employment report is forecast OK, with 145,000 non-farm payrolls, and a small increase in the unemployment rate that reflects a normalisation of differences between the labour market measures rather than any kind of trend signal.
  • The UK offers credit data in the wake of the signals of credit accommodation that were coming out of the Bank of England survey yesterday. There is a lag between loan application and lending, of course, so the data may not show the full force of accommodation quite yet.
  • Euro area data is relatively dull again today. Consumer price inflation is not enough of a concern to get anyone in the markets especially agitated, and the service sector PMI of business sentiment has been signalling contraction for a while.

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