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Economists take over

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Economists take over today. Not everything, sadly (that nirvana still eludes humanity), but as far as financial market focus is concerned. There is less political noise today, allowing investors to look at the underlying economic fundamentals.
  • The US senior loan officers' survey indicated that demand and supply of credit are consistent with an economy at full employment. An easing of regulation triggering an increase in lending should be considered an inflation pressure that the Fed would need to counter.
  • German industrial production was weaker than expected, but this is a volatile figure. The broader picture of the German economy remains strong. UK BRC retail sales were weaker than expected in January, perhaps in reaction to attempts to pass on the costs of sterling weakness.
  • The Reserve Bank of Australia left interest rates unchanged, which is not a surprise. The RBA governor said that inflation was due to rise above 2% this year. As the global disinflation mirage brought about by lower oil prices fades, inflation rates will rise to reflect underlying local fundamentals.