Biases to tighten and discreet easing
- Tartan tracking - Three polls all showed a 52:48 split in favour of keeping the union. Whether a result like this is close enough to be considered a Québécois scenario would depend on the response of politicians. Former US president Clinton intervened to say he was a unionist - he intervened in Quebec too.
- The week's main event, the US Fed meeting, is expected to turn out to be a bit of a non-event. We do not see the "considerable period" language being dropped from the statement - why despoil the perfect prose? Rather we see the Fed changing its guidance later this year.
- Chinese policy stimulus is here, though not too overtly. China has put RMB500 million into the banks in additional liquidity. This reduces the chances of a reserve requirement rate reduction in our view.
- The Bank of England minutes are likely to indicate a continued inclination towards tightening, if not quite yet. In the Euro area we have the release of CPI - there is little to no evidence of structural deflation, but there are temporary disinflation forces at work.
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