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Quantitative qualms

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Markets ignored the US presidential debate in favor of focusing on media speculation that quantitative policy measures may be tightened. The Fed is already tightening quantitative policy in an organic fashion; the speculation is about the ECB.
  • Gold prices fell rather dramatically yesterday (the risk of short-term corrections were highlighted by our analysts last month). However, the economic information content of the gold price is rather limited – this is not something economists get too excited about.
  • The UK's BRC measure of prices in shops continues to show declines. Sterling's weakness (more weakness this week) has not translated into significant consumer price increases because companies seem reluctant to rush to pass on the costs (producer prices are rising) and because local influences dominate inflation.
  • Final Euro area business sentiment data numbers are not likely to be a focus for the markets, but the US service sector ISM may be more significant (it is expected to show improving sentiment). Final durable goods and capital goods orders numbers are also due from the US.