Structuring change

Posted by: Paul Donovan

23 Jan 2020
  • The ECB is to launch its structural review of policy today. Negative interest rates do not really work in the longer term. Investors will want to know if the ECB will reflect that in its review. One challenge is that ECB President Lagarde might not provide the same sort of leadership on economic policy structure that an economist might.
  • The threat of the pneumonia virus has not been declared an international emergency by the World Health Organisation. The Chinese city of Wuhan has had a transport shutdown. The main economic threat comes from fear – exaggerated by social media's tendency to promote fake news.
  • The interminably tedious UK-EU divorce moved a step closer with the UK Parliament finally passing the required legislation (it still needs Royal Assent). This is not the end, it is not the beginning of the end, it is probably not even the end of the beginning. This promises to go on, and on, and on.
  • The US is offering little of market interest today – the trial of US President Trump is still not exciting investor attention. However, the weekly jobless claims data may be worth a glance as the strength of the US consumer (and thus the US economy) does depend on the labor market.

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