US takes the high road, Euro takes the low road
- Events on Thursday have gone some way to highlight the likely divergence of US and Euro monetary policy. US data has reinforced the idea of the Fed tapering sooner rather than later (we see a January move) while the Euro rate cut emphasises the challenges of that economy.
- Divergent banking system experiences have continued to the divergent economic experiences of the US and the Euro area, and deflation risks played a key part in shifting expectations. The ECB is facing disinflation if not deflation risks, while the US GDP deflators showed a lessening disinflation threat.
- US employment data today comes confused by the government shutdown. We see an unemployment increase (because of the way the data is handled) but a consensus 125,000 on private sector payrolls. Personal income and consumer data should show the US consumer industriously visiting the mall.
- For the Euro area the Troika will be turning up in Athens once again, though of course nothing is likely to be forthcoming. We have a brace of ECB speakers in the wake of muttering about some dissent from yesterday's decision, and French industrial data comes after yesterday's softer German figures.
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