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Fed fun and fundamentals

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The US Fed concludes its deliberations today, but there is no realistic expectation of a change in policy. Markets are instead agog to learn whether the Fed will signal an intention to move on interest rates at the September FOMC meeting.
  • What we are likely to get is a Fed that emphasises data dependency, and this therefore perhaps makes the forthcoming data more important than the Fed decision today. We have the employment cost index this Friday and the employment report next Friday to obsess over.
  • Germany and France are offering consumer confidence data – after the US conference board figures weakened (allegedly, in part, because US consumers worried about Greece and China). It will be interesting to see if the Germans and French can be a little more stoic about the consequences of the Greco-German crisis.
  • UK consumer credit data (including mortgages) are due. The UK inflation rate is likely to rise, but not in an alarming fashion this year. A more immediate concern for the Bank of England may be the growth of revolving consumer credit, inducing them to fire a warning shot of a rate increase.