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Yellen in Wonderland

| Posted by: Paul Donovan | Tags: Paul Donovan

  • What is there left to say on the Fed? It is not the start of tightening (September 2014). It is not "lift-off" (this is not Thunderbirds. No rocket-like trajectories are involved). It is a hike in rates, probably with a dissent or two.
  • What of the future? Yellen is likely to say that the slow path of tightening will be "data dependent". What does that mean? A word means exactly what she wants it to mean, nothing more, nothing less. Markets can interpret "data dependent" to mean whatever they like.
  • Several Fed speakers have been at pains to indicate that the fabled "dot" forecasts are a reasonable indication of what a "slow" pace of tightening might look like. Looking at the revised dot forecasts may therefore be helpful.
  • Bank of England governor Carney has been saying that there is no rush for the UK to follow the US. UK labour data comes out today. The Euro area offers final November CPI and some business sentiment data.