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Bullard the bull?

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  • The past week has seen markets seemingly convinced that the economic sky was falling. Perhaps the most unexpected event was US Fed President Bullard talking about a longer period of quantitative policy as a result of weaker inflation expectations.
  • Bullard's comments are peculiar because the Fed is not normally concerned about inflation when non-core elements lie behind the shifts; because the US consumer is useless at forecasting inflation (lessening the value of their expectations); and because quantitative policy is already tightening.
  • There is almost no economic data to speak of today, unless you count preliminary Michigan consumer sentiment (and it is difficult to get really excited by that) alone. To compensate, we have more central bank speakers than even an economist knows what to do with.
  • Haldane of the Bank of England may be of some interest, as market expectations about UK tightening have shifted with the inflation data. There are too many ECB speakers to name, and from the US we have Yellen (speaking on inequality, though there may be some tangential market comments from that).

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