Follow Paul Donovan

In emerging markets, something stirs

| Tags: Paul Donovan

  • Turkey's central bank is to meet in emergency session and announce its decision on rates at midnight local time (why midnight? Who knows). We expect them to raise the upper boundary of the rate corridor by 3%-4%. A less significant move would be to invite further currency weakness.
  • While the Turks are waiting for midnight (for dramatic effect?) the Reserve Bank of India beat them to the headlines with a 0.25% increase in their rate and a vague promise of an inflation target in 2016. Central banks in fragile markets seem to be finally implementing policies they should have implemented months ago.
  • UK Q4 GDP is scheduled, with the market expecting a relatively strong showing (a real 2.8% print yoy seems to be the consensus). UK nominal GDP should be boosted by the strong real performance, and has been recovering strongly (nominal matters to debt dynamics).
  • The US gives us the Richmond Fed survey of business sentiment. Recalibrating other regional surveys onto an ISM basis has demonstrated a general expansion of the economy. Consumer sentiment is also due, with the standard warning about the tendency of sentiment to overreact to underlying fundamentals.
     
Listen to the audio version of this briefing.