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Tightening, in a North American accent

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Carney of the Bank of England declared (in a Canadian accent) that monetary policy needs to move to stand still. This is less of a riddle than it seems. If the global neutral rate of interest is rising and rising inflation is eroding real interest rates, then nominal rates need to rise to remain neutral.
  • The US offers import and export price data for August – another month that saw the dollar weakening. This may boost export prices (in dollar terms) as US exporters hold foreign currency prices constant and increase profits. Import prices are vulnerable to higher commodity prices, but other prices are less likely to react to the currency.
  • The German ZEW economic sentiment survey is due. This is a survey of experts, not companies, and is therefore a little less prone to overreact to underlying economic trends (economists being more rational and less emotional, as a rule).
  • Geopolitics provides some interest as US President Trump is to address the United Nations General Assembly. If Trump sticks to the script, then North Korea and Iran will be covered. The UNGA is probably not an appropriate forum for Game of Thrones-style rhetoric.