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A data distraction while we wait

| Posted by: Paul Donovan | Tags: Paul Donovan

  • As markets await the Fed decision this week (we see a 60% chance of a hike) we have some data to entertain in the form of industrial production and retail sales figures. Both are nominal numbers, though on that it is worth noting that the retail price of oil is not as weak as crude.
  • The Fed is data dependent at the moment, but it is not data point dependent. Given the quality of statistics and the frequency of revision to economic data these days, this is a good thing. It limits the possibility of the Fed being swayed by single data points.
  • The Bank of Japan did nothing, with its characteristic masterful command of inertia. However there was no hint of future easing in the accompanying statement in spite of political comments to that effect.
  • UK CPI inflation is likely to remain low, although the Bank of England has perhaps been more focused on the credit cycle than on the inflation cycle recently. Supermarket price wars are fading and the labour market has shown some signs of wage growth, so the very low CPI levels seem unlikely to last.