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Germany objects

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  • The German finance minister has (somewhat unusually) tried to suggest what the European Central Bank should do - apparently it should stop bubbles forming in asset markets. German angst over negative rates appears to be increasing.
  • The US policy focus should revolve around tomorrow's consumer price inflation, with the headline subject to upward pressure from energy prices. However we see more at work than energy prices alone, with a risk that the Fed falls behind the curve.
  • UK Rightmove house prices declined for the first time in eight months. The Bank of England has a clear interest in following the housing market, not for house prices per se (that should not be a policy maker's concern) but for the reaction of consumers and the financial sector to higher house prices.
  • Risk aversion is unlikely to go away, although there is no obvious trigger for an escalation of investor concerns just yet. The situations in the Ukraine and Gaza will exert a market influence (ultimately) via energy prices.

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