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The Day of the Doctor

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  • Today belongs to Dr Bernanke of the US Federal Reserve. We think that there is only a one third chance that the Fed will tighten quantitative policy today - our focus is on the FOMC meeting at the end of January. Whatever is decided, markets will likely react given the range of investor opinion.
  • Delaying means another $85bn of printing, but delaying avoids potential disruption to retail sales, at a vital time. Today's press conference could be used to shape expectations, and to distinguish quantitative policy (which needs to tighten) from monetary policy (which does not need to tighten).
  • Euro finance ministers stumbled out of their meeting at 0230 this morning to declare that they had solved one of the problems of banking union. No one elaborated on the details (perhaps understandably; it was 0230, and they may have had difficulty remembering the details with any coherence).
  • Data is not going to be a key focus, but there are some releases. German business confidence is not the problem for the Euro area. UK employment should be strong, and there are Bank of England minutes plus the Agents' survey.

Listen to the audio version of this briefing.