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Patience to topple from her monument?

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Across the United States, countless millions of Americans are anxiously waiting to hear whether the word "patient" is to be included in today's statement from the Federal Reserve. Or, alternatively, in the real world no one cares and it is only financial markets that obsess about two syllables.
  • The Fed will hike in June, in our view, and it does not want markets to be surprised by that. Hence the quiet toppling of patience from her monument. The fabled (probably overrated) dot forecasts and the 2016 outlook will help shape expectations as to the pace of tightening post June.
  • Not to be outdone the Bank of England offers minutes from its last meeting - a central bank that has a history of division in the approach to interest rates. Labour market data is expected to show a further decline in unemployment on the ILO measure.
  • Japan's data was superficially robust with strong exports, but much of this is because the foreign currency prices are staying stable and translating to higher yen values for exports (not higher real volumes). As such the read through to economic activity should be treated with caution.