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Surprise, surprise

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  • Hawks pushed doves into a minority on the Bank of England MPC - exiling the Governor, no less. Doves pushed hawks into a minority on the Fed. So of course, sterling weakens against the dollar. Of course the degree of surprise at the minutes of the two central banks has to be taken into account.
  • We do not see the Bank of England easing policy any further. We do see the Fed tightening liquidity later this year if economic fundamentals warrant. Perhaps the other message from the Bank of England is for Mr Carney - being Governor does not guarantee you get your own way.
  • Markets seemed inclined to a somewhat more risk averse position overnight. The Euro area is offering service sector sentiment data today. Spain has a bond auction, that may be worth looking to. From the UK we are to get public sector borrowing
  • The US offers CPI inflation, which is unlikely to create too much by way of surprise. The existing home sales figures are forecast to come in somewhat better, and housing continues to provide a foundation for a stronger US consumer in our view. The Philly Fed business sentiment should recover somewhat.

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