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The Fed previews the ECB

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Before the ECB gets together tomorrow, we have a barrage of US Federal Reserve commentary today. The issue for markets is not December, but what "slow and gradual" means in terms of the 2016 hiking cycle.
  • Comments already out from Evans are interesting in this regard – he sees a case for rates ending 2016 below 1%. In other words the market (not the economic) base case coincides with the view of the most extreme tail end of the FOMC distribution.
  • Euro area flash November consumer price inflation bursts forth before an astonished world. It is the core rate that may be most interesting. Core has been accelerating this year (up 0.5% to 1.1% yoy), and this signals where headline will head post oil base effects.
  • Australia saw exports supporting growth (what China slowdown?), but the domestic side of the economy was weak – pulled down by capital spending. This was known about, and the RBA seems to be relatively content for now.