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Does Draghi get cold turkey for Christmas?

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The ECB tapered without tapering yesterday – cutting bond purchases by more than expected, but not setting zero bond purchases as the end game. Draghi's addiction to easing is not being treated with the shock of "cold turkey" withdrawal, but we expect tapering in 2018.
  • Chinese inflation was moderately higher than expected for consumer prices, and more noticeably higher than expected for producer prices. Producer prices matter more to the rest of the world, but they still do not matter very much. China's impact on global inflation is and has been minimal.
  • US wealth rose USD 1.59 trillion in the third quarter. This predates the Trump asset market sell-off (bonds have fallen in value roughly three times as much as equities have risen since the US election). Rising wealth suggests rising wealth inequality, but that need not mean rising income inequality in a low yield environment.
  • The University of Michigan will release an opinion poll on consumer sentiment, including an opinion poll on future inflation. Some opinion polls have proved to have a modest margin of error in recent months, and consumers are completely useless at predicting inflation, so this data may not be that valuable.