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Trick or taper

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  • The Fed did nothing in terms of policy, of course, but signalled a belief that the labour market was performing reasonably well and that it was not concerned about tighter financial conditions. Those hints, especially the latter perhaps, would be consistent with a scaling back of bond buying sooner rather than later.
  • The Bank of Japan did nothing in terms of policy of course, but it might have to do more next year. Base wage inflation came in negative for the sixteenth consecutive month, with downward revisions to previous data. This does not combine well with the rise in import prices and perceptions of real spending power.
  • UK consumer confidence was also damaged by perceptions of real spending power, with concerns about rising energy costs undermining the GfK data. Energy costs have received a great deal of publicity and may continue to impact the consumers' consciousness (if not their behaviour).
  • Euro area data is relatively light. German consumer confidence is dues and there is the flash estimate of Euro area CPI €“in normal times the flash estimate of CPI would be of extreme importance to investors, but these are not normal times.

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