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Focusing on Fed speak

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The data calendar is a desolate wasteland of nothingness today. The tumbleweed of Japanese machinery orders and producer price inflation is not enough to distract markets.
  • We do have three speakers from the US Federal Reserve to enliven matters. One problem with the Fed is that it is intellectually divided, with multiple policy channels to debate (monetary, quantitative, regulatory). That allows for a confusing picture to emerge from comments.
  • There is minor political noise in Europe. The Danish prime minister suggested that the UK should be prevented from gaining a competitive advantage by leaving the EU (by limiting the UK's advantages, not by promoting the EU's competitiveness).
  • The People's Bank of China's economist Ma Jun has suggested that steps need to be taken to prevent a Chinese housing market bubble from forming. However, there is a tension between the government's desire for growth and employment, and concerns about leverage finance.