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A world without Marmite

| Posted by: Paul Donovan | Tags: Paul Donovan

The US Federal Reserve minutes indicated a closer decision on whether to raise rates than markets may have supposed. This is because markets do not necessarily observe the same things as the Fed. Inflation in housing and healthcare, upward revisions to growth etc. are often overlooked by investors.

The costs of the UK referendum are becoming apparent; a Marmite shortage is being declared by the media (this may be a benefit, not a cost). The shortage results from a dispute over passing on the price implications of a weaker sterling. Sterling has resumed its weakening path in Asian trading.  

China's exports were weaker, although the effect was exaggerated by moves in the currency. China still runs a trade surplus, which is broadly matched by the modest net capital outflows. This removes any pressure for intervention in the currency markets.

There is little happening in the Euro area (final German consumer price inflation excites nobody, not even the Germans). With the Euro area economy offering reasonable growth and no discussion on ECB tapering expected just yet, the market focus is not likely to be Europe.