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All quiet on the economic front

| Posted by: Paul Donovan | Tags: Paul Donovan

  • It is a worryingly quiet day for economic data. On days like this, markets fall back onto alchemy and technical analysis. While the release of Danish consumer price inflation is, no doubt, a matter of considerable importance, it is unlikely to change the direction of financial markets on its own.
  • The US embassy in China has received protests about equity market declines. The US is accused of colluding with the Chinese regulator to bring about the fall in prices. This seems unlikely. Given the US president's tendency to confuse equity prices with political and economic success, it is unlikely the US government likes recent market moves.
  • US Vice President Pence has suggested that the US will talk with North Korea. Markets do not normally pay too much attention to extreme negative political risks, so this may have only limited financial impact. Nonetheless, a public statement, and not by tweet, adds credibility to the policy.
  • Nowotny of the ECB suggested that financial markets were not the focus for central banks (equity markets represent a small part of the economy, after all). Nowotny was also suggesting that bond buying should end. We think September a likely date for ending rather than tapering the program.