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Synchronised expectations management

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  • The Fed speakers yesterday performed a complex synchronised expectations management routine, with the phrase "data dependent" (in reference to rate hikes) being heard on all sides. The remarks were consistent with our view of a June 2015 hike - subject to data, of course.
  • We have US import prices today, which are not likely to lead to too much excitement, and then another barrage of Fed speakers assails the markets. You would think FOMC members would be too busy looking at data to have time to make all these speeches, but apparently not so.
  • Japanese consumer sentiment took another dip, sinking further into pessimism territory. There is a close relationship between sentiment and the cabinet approval rating, and via that to the government's ability to pass legislation, so this has a bearing on the reform program.
  • Markets have been sensitive, perhaps hyper-sensitive to growth risks in recent days. Euro area data is not likely to help, with French and Italian industrial production unlikely to paint an especially healthy picture. This comes after ECB president Draghi essentially reiterated "whatever it takes" on monetary policy.

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