Central bankers' day in the spotlight

Posted by: Paul Donovan

25 Nov 2019
  • There is a central bank focus today, with at least four speakers from the ECB on the agenda. We did hear from ECB President Lagarde last week, urging fiscal policy makers to act. Federal Reserve Chair Powell is also due to speak (late in the day). This follows a meeting with US President Trump.
  • However, in these disturbed times, it pays to look beyond the head of the central bank for policy guidance. Lagarde of the ECB and Powell of the Fed are both lawyers. Whatever the merits of lawyers, they are not economists. Economic policy direction may be sought from a broader range of central bank members than has been the case in the past.
  • China has announced increased penalties for intellectual property theft. This is a critical area of trade negotiations with the US. Markets have reacted positively in expectation of a wider trade deal.
  • The data calendar is a mess of surveys. The German ifo is likely to attract more market attention than US regional Fed surveys. Some survey evidence has surprised positively – not because things are necessarily getting better, but because survey evidence was too negative relative in the past (and the gap to reality is closing).

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