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Guiding unfurls

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  • Markets are moving back to the idea that the US Fed will reduce its bond buying program with an announcement in September. Fed president Evans, who is regarded as a dove, was signalling a tolerance for a scaling back of liquidity injections.
  • In the wake of credit survey data suggesting US banks are increasingly willing to lend, we have consumer credit numbers this year. The acceleration of consumer credit is part of the reason for the Fed to scale back �€“ banks are injecting liquidity so the Fed does not have to.
  • The Bank of England publishes the inflation report today, along with the response to the government request for consideration to the idea of forward guidance. We would caution that markets should not expect too dovish a structure to be established.
  • German industrial production data is due out. With half German exports ending up in the EU, the fate of the Euro has been intimately bound up with German economic performance. As there is evidence that things have stopped getting worse in the Euro area, this should support today's data.

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