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Risk and sentiment

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  • Without being enough to trigger risk aversion, political risk has emerged over the weekend. Turkey's military shot down a Syrian airplane. Meanwhile in France (in a possible prelude to a European trend in the May elections) the Front National performed strongly in local elections.
  • Business sector sentiment data is scheduled, with the normal caveats as to volatility (the volatility of sentiment has risen relative to the volatility of real economy data). The Euro area is expected to continue to signal expansion.
  • Chinese manufacturing sentiment continues to point to contraction (there is no contraction in the economy of course, just in sentiment). Investors have become hopeful that this means stimulus. China's government has clearly prioritised employment, but reacting to PMI data might seem an overreaction.
  • US sentiment data is not so much of a focus, although the PMI numbers were less weather affected than other economic data. We have the Fed's Stein speaking as well today, possibly of interest as investors reassess their view on US interest rates.

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