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In the Fed we trust

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The Fed reminded the world why economists should run central banks. It explicitly dismissed the troubled first quarter data releases and focused on the trends in the economy – which argue for rate increases and an acceleration of quantitative tightening. The dollar rallied a little, but not enough to be really noticed.
  • US productivity and unit labor cost data is due. The former is important if America is to achieve President Trump's 4% trend growth target. The latter is important to inflation as domestic labor costs drive US inflation. There are media reports that the House of Representatives will vote on Trumpcare II today.
  • The French presidential debate ahead of Sunday's vote did not use the most presidential of language, perhaps. Those reliable indicators of intention, the opinion polls, signaled that markets have little reason to change probabilities about the election.
  • Eurozone service sector sentiment opinion polls are due today, adding noise but little content to the economic debate. Euro area retail sales are also due for release and will be overlooked.