Tweeting the future of the Fed
- Economists traditionally pour over US Federal Reserve interest rate pronouncements, using every nuance to predict where policy may head. This is especially hard at the moment – the Fed is intellectually riven, and the binary framework of the Taylor Rule does not really apply to decision making.
- Economists must also now look at Twitter, for the future of the Fed is no longer decided by the Fed alone. Will Trump retweet the Fed's Twitter feed? Will he comment? Will he stay silent? This could matter to market perceptions of the Fed's future direction and independence.
- For currency reactions, note that US rates have been above euro rates all year (euro rates are negative); US bond yields have been above euro bond yields all year (many euro bond yields are negative); US equities have outperformed Euro equities all year. The euro/dollar exchange rate is essentially unchanged from January this year.
- Japan's Tankan opinion poll survey of sentiment showed slight weakness in the details – companies are less inclined to invest than had been hoped and small businesses are more pessimistic than had been hoped. French and Italian final consumer inflation data comes out, and US producer price inflation is due.