Give thanks for the Fed economists
- The US Federal Reserve indicated as clearly as it could that there is an intention to raise rates in December. Despite the debate, it is unwise to get too agitated about where inflation is. Inflation is not a precise measure. Coming within 0.5% of target should be good enough for any central bank.
- We expect the Fed to raise rates at least twice in 2018. There is uncertainty about the outlook. After February, there will be four governor vacancies at the Fed. There is little prospect of the nomination and confirmation process being concluded quickly. Regional Fed presidents will be a majority at the Fed, and regional Fed presidents are the traditional Fed dissenters.
- Eurozone PMI business sentiment opinion polls are due. This is economic noise. A rise in one of these indicators does not mean manufacturing is expanding. Since 2010, the manufacturing PMIs have had weak or negative correlations to reality.
- The UK budget is of no interest to anyone outside the UK. The UK budget is of little interest to anyone inside the UK. Foreigners who have invested in the lower end of the UK property market may want to look at stamp duty changes (expected to increase property prices).