No lift off. Already divergent.
- The week is of course dominated by the US Federal Reserve. We and the market expect a rate rise. This is not "lift off" (there is no rocket-like trajectory) nor is it the start of policy divergence. Divergence in quantitative policy is already well under way.
- If the Fed policy decision is not dramatic nor newly divergent, why the fuss? Because a large proportion of people in the market have never had to make investment decisions in a rising US rate environment.
- France's election results saw the Front National fail to win any regions. The FN is seen as being hostile to European integration, and so a victory may have led to market concerns about European centrifugal forces. This result reduces perception of that risk.
- Euro area industrial production data (for October) should be positive, belying any suggestion of a manufacturing recession. Italian final consumer price inflation is also scheduled.