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Fedspeak speaks volumes

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Greece has indulged in its last permissible form of government fiscal stimulus – holding another election. The result is a government that is likely to be exactly the same as the last government (although PM Tsipras was not the anti-establishment candidate this time).
  • Fed President Bullard has apparently joined the campaign #FreeTheFed, opposing the Fed being held hostage by the markets and saying he argued for a rate hike at the FOMC. This is pertinent as Bullard will have a vote on policy next year.
  • Fed Presidents Williams and Lacker also argued the case for a rate increase this year – it does rather raise the question of who was left voting for no change? There is little point trying to place such views on a hawk-dove spectrum, with the Fed now a multi-faceted institution.
  • Anecdotes on the Chinese economic outlook assume greater importance as President Xi makes a state visit to the US. Nothing need change fundamentally – in a world where financial market economic analysis has seemingly been downgraded, spin rather than substance tends to move market prices.