Daily update
Daily update
- A single, dubious quality US data report last Friday was enough to send bond and equity markets into paroxysms of delight. One month’s employment report should not trigger market moves of this degree. It is easy to put all the blame for this on the exuberance of traders, but Federal Reserve Chair Powell’s mantra of “data dependency” means investors will naturally elevate imprecise short-term data releases into the arbiters of US monetary policy.
- We do hear from some Fed speakers today, including Fed President Williams. The challenge is that while “data dependency” remains the narrative, Fed speakers are competing with market economists for the role of talking head data-analysts on television. It limits the impact of their remarks.
- Assorted business sentiment opinion polls are due, but investors do seem to be paying less attention to this noise.
- Politics may provide a distraction, but will probably not provide direction to markets. China’s President Xi arrives in Europe as economic nationalism continues to increase (on both sides). Structural change encourages scapegoat economics and prejudice politics. The challenges facing current UK Prime Minister Sunak in the aftermath of local elections are unlikely to excite investors, who seem comfortable in their expectations around the forthcoming general election.
