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Central bank signals

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The US Federal Reserve minutes were unusually clear in suggesting a September rate rise in September. US President Trump's desire for easy money is not being heard. The language was consistent with the idea of two hikes this year, though the fiscal tightening of Trump's trade taxes was mentioned very clearly as a risk to growth (and thus to rate rises).
  • The Fed also discussed whether the shape of the yield curve mattered – bond dealers are not granted any special insight into the economic future (only economists have that), so the shape of the yield curve should not be considered that important. Structural change in the economy is on the agenda tomorrow, with the Fed's Jackson Hole summer camp for economists.
  • The ECB will be publishing an account of their last get together. This is likely to be less exciting as the ECB has been extremely explicit about how it intends to conduct policy in the forecastable future. The Bundesbank's Weidmann is speaking, with German media suggesting German Chancellor Merkel may not support Weidmann to be the next ECB President.
  • The data calendar contains assorted purchasing managers' opinion polls that allegedly reflect the sentiment of the business community.