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Easing to achieve goals

| Posted by: Paul Donovan | Tags: Paul Donovan

  • China eased policy in Friday, as part of its relentless pursuit of its growth target. The rate cut will help with the cost of servicing bad loans. The lowering of the reserve requirement ratio is presumably aimed at encouraging Chinese consumers to consume.
  • This all comes ahead of the US Fed meeting, with markets and economists a long way apart on the direction of US rates. Part of the problem may be that this is a small business recovery – the dynamic of the listed corporate sector is changing less than the dynamic of the economy.
  •  German ifo business sentiment is due, with market expectations for a slight decline (though generally positive). Globally, survey respondents appear willing to play games with surveys – knowing surveys have weight with policymakers, they answer according to desired policy outcomes.
  • The ECB's Mersch speaks, in the wake of Draghi's "vigilance" with an Italian accent. The US offers new homes sales data but this is not likely to be a major focus.