Fed fun, and fear and free trade
- For the first time since the US Fed's independence, the rate setting committee will be presided over by someone who is not an economist - but a lawyer. In 1923, the German Reichsbank was presided over by someone who was not an economist - but a lawyer. As former Fed Chair Yellen noted at the last Fed press conference, correlation does not equal causation. Fortunately.
- Investors expect a 0.25% increase in US interest rates. There is a focus on the forecasts that will be published – although Fed forecast accuracy is not noticeably better than other economists' forecast accuracy, and the members of the Fed can and will change their minds.
- UK labor market data is due. This is a resilient part of the economy. Furthermore, official data may understate the resources available to the UK consumer. The data should allow the Bank of England to raise rates in the coming weeks.
- The G20 issued some masterful statements of the obvious. The G20 is against a trade war (it probably will not happen). US Treasury Secretary Mnuchin said the US is not afraid of a trade war. Perhaps the only thing the world has to fear is the ignorance of fear itself.