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Chair Yellen's little list

| Posted by: Paul Donovan | Tags: Paul Donovan

  • US Federal Reserve Chair Yellen has a little list; of stimulus and bond holdings that surely won't be missed. Passive quantitative tightening is coming. The discussion seemed to focus on sooner rather than later. Inflation quirks and distortions are being looked through (beneath them the unemployment-inflation relationship holds). 
  • North Korea is attracting attention with the US administration talking about military options – but investors are not too concerned. More concerning for markets is the shift in tone of the Trump Twitter feed about China. Things have deteriorated since Trump and Xi shared a beautiful chocolate cake together.
  • The EU and Japan agreed to a preferential trade deal. It is not free trade; it raises relative barriers to those outside the deal. This is relevant to the UK – currently inside, soon to be outside. The deal has to be ratified, and no one knows what the Walloons think (or if they will be asked their opinion).
  • US service sector sentiment is due, and should be ignored but probably will not be. The ECB gives the details of their last policy meeting. With a change in language from the ECB, this will excite attention, but not as much as the Fed's minutes excited.