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Forward guidance - guess

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  • The US Federal Reserve meeting cut its bond buying program another USD10bn, exactly as it was expected to. However financial markets have chosen to interpret the comments at the press conference a little more hawkishly.
  • In fact, Yellen was at pains to mask her comments in appropriate Delphic obscurity. The focus this year is spare capacity in the US (meaning spare capacity in the US labour market), and there will be considerable uncertainty around that.
  • The data calendar is light - the US Philly fed sentiment index and jobless claims. From Europe there is little data, although there is some bond supply (notably Spain) in the wake of rising yields yesterday.
  • European leaders start a two day meeting today, which is unlikely to offer much by way of integration or banking union action (for one thing the European parliament is not cooperating). However markets may look out for hints on the severity of any future sanctions against Russia.

Listen to the audio version of this briefing.