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Just around the corner

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  • The Fed minutes signalled that bond tapering is just around the corner (the only thing left to debate is which precise month it happens in �€“ we believe January is the most likely option). The Fed's task is to make clear the distinction between quantitative policy (liquidity) and monetary policy (capital cost).
  • The challenge of data analysis was on display yesterday as retail sales showed the US consumers' ever ready willingness to leap into an SUV and drive to the nearest shopping mall. This was in spite of a sharp drop in consumer sentiment �€“ underscoring the unreliability of sentiment data as a real economic guide.
  • There is some irony in the fact that most of the data today is sentiment data, albeit business sentiment data. The Chinese numbers showed a somewhat slower than expected pace of economic expansion. US Philly Fed data is also due.
  • The market focus for the Euro area manufacturing and service sector sentiment data may well be on the national details rather than the overall Euro area headline. France and Italy have had their growth in the spotlight following weaker GDP data and OECD criticisms.

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