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German elections? Not just yet

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Germany may be heading to new elections after Chancellor Merkel suggested this would be a preferred outcome. Financial markets did not really react too much. For one thing, the German Bundestag cannot just dissolve itself at will.  A relatively lengthy procedure must be followed, and that procedure may not involve Merkel as candidate to be chancellor.
  • In the US, Fed Chair Yellen confirmed an intention to resign as a Fed governor if Powell is confirmed as the next Fed chair. This means that there will be four vacant governor positions, and the regional Fed presidents will have a majority on the FOMC.
  • Four Bank of England members are dragged before the UK parliament to testify today. With a rate hike so recently, the testimony is unlikely to provide much interest in terms of policy guidance. The exit from the EU will doubtless be brought up, because it always is brought up. This does not make the topic any less tedious.
  • Emerging markets may attract wider attention, with events in Turkey producing some significant financial market results. The lira has weakened significantly, and the central bank has failed to intervene (it seems). Tensions with the US appear to be escalating.