Taper, tax, tightening. Not really, maybe, no.
- ECB President Draghi's addiction to easing is to be challenged at today's ECB governing council. The result is unlikely to be a "taper" of bond buying (with a clear objective of zero bond purchases). Instead, a stepped reduction in bond purchases, with uncertainty about the medium term, is the likely outcome.
- Bond markets have been reconciled to the idea of some policy tightening – and the ECB is not alone. There is a simultaneous (though not synchronized) tightening of policy across the world's major central banks. Growth and inflation are normal. It is central banks that are conspicuously abnormal.
- The US has another tax hurdle to clear, with the House of Representatives scheduled to vote on a budget resolution. Passage is a necessary condition for progress on tax cuts, but some Republican representatives were opposing the resolution. Risks are asymmetric – passage is not a huge positive, failure would be a negative for equities.
- Sweden's central bank meets on rates. UBS's recent property bubble index identified the Stockholm property market as a bubble risk. Swedish inflation keeps coming in higher than expected, and higher than target. Nonetheless, there is little expectation of the Riksbank moving to tighten (currently negative) interest rates.