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Anecdote and markets

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  • The Fed's Beige Book comes out, and the anecdotal evidence of both the labour market and bank credit creation does matter. However, the overall tone of the Beige Book has been "behind the curve" of economic reality in recent publications; the Fed may be underestimating or downplaying the recovery.
  • Service sector sentiment litters the Euro area economic calendar, after disappointments in the manufacturing sentiment data. Italy may call for some special attention given the manufacturing weakness there.
  • UK service sector sentiment is also due, and while the signals for economic activity have been strong in the recent sentiment data, they have also been slowing. The BRC shop price index confirmed no inflation threat as the Bank of England starts its two day meeting, but inflation is not really the main policy story.
  • China's service sector data showed a small improvement. More importantly, the major local banks seem to be expanding their lending activities (we think this is part of a broader trend). In Japan Abe reshuffled his cabinet, with some key appointment changes.