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A question of labour

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  • Fed Chair Yellen's Congressional testimony did mainly what was expected. The tapering is set for a steady USd10bn per meeting reduction (almost as if Bernanke is controlling it from beyond the economic grave), and rates will not be changing soon.
  • Yellen's labour market comments were a little odd - she thinks the long term unemployment level a signal of latent spare capacity in the market, while others might consider it a signal of a higher natural rate of unemployment (and less spare capacity). This may be a focus for Fed debate.
  • China's export data was stronger than expected, indicating (to the extent Chinese data indicates anything) that global demand is doing OK. Euro area industrial production data is due, and to some extent that too may be assisted by global demand.
  • The Bank of England inflation report is scheduled, in the wake of the death throes of the Canadian accented forward guidance plan. With markets starting to conjecture that the Bank maybe amongst the earliest to consider hiking rates, the report may help set the tone for rate expectations

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