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Sticking to the script?

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The US Federal Reserve minutes hang over the head of the markets. The main problem with the last meeting was not the decision (though the failure to raise rates was not necessarily correct) but the impression that the Fed is held hostage by the markets.
  • Subsequent Fed speeches have attempted to shore up the idea of a December rate hike – Yellen's speech on inflation seemingly repudiated much of the international / market influence implied in the Fed statement. The minutes may well be a part of this general "rate hike" script.
  • The Bank of England, which likes to be busy, is going to be doing decision, press statement and minutes all at the same time. Even if the Fed had moved, this month was never likely to be a meeting to raise rates. The Bank is also likely to use quantitative and regulatory policy alongside monetary policy.
  • The G20 gathering of central bankers and finance ministers may add to the noise around policy and policy decisions. There is little else to distract financial markets. Japanese machinery orders were weak overnight. German trade data makes an appearance.