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A tale of two central banks

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  • Draghi of the ECB pounded the table and said that he really, really, really means it when he promises policy accommodation for ages and ages and ages. The verbal strengthening of the accommodative stance might reflect divisions over the desirability of taking real world action.
  • The US Fed is likely to be confronted by an improving unemployment rate â€Â“ we are forecasting 185,000 for non-farm payrolls and a decline in unemployment to 6.9% today. Improvements in the labour market have been identified by the Fed as a necessary condition for monetary (as opposed to quantitative) tightening.
  • Markets should be wary of anticipating changes in US monetary policy any time soon. Although there is a debate to be had about where the level of natural unemployment now lies in the US (almost certainly higher than in the past), it is a debate for 2015 not 2014.
  • The European time zone has industrial production data (UK, France and Spain). Spain and France are probably most worthy of attention - the former as a pivotal economy, the latter as investors look for evidence of competitiveness being restored.

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