Daily update
Daily update
- The embarrassing lack of economic information leaves markets prey to idle speculation, rather than the pure and objective guidance that economists can offer. Yesterday’s exchange of fire between Iran and the US has not had a major market impact—it fits with Iran’s narrative on negotiations (which is what markets have priced), and keeps the optimism bias more or less intact.
- The Federal Reserve offers a few speakers—of some interest given the deepening public divisions at the Fed. Fed President Kashkari suggested a prolonged war might require a series of rate hikes—which would only make sense if second-round inflation effects started to emerge.
- The European Central Bank (ECB) is still careering towards a June policy mistake with no one prepared to pull the emergency brake. A rate hike is being signalled more and more frequently. Tightening policy is not necessary, but should not do too much economic damage. It will do little or nothing to change inflation and inflation expectations (the Iranian and US military commands are not waiting to hear from the ECB before deciding whether to launch more missiles and drones).
- There are some sentiment numbers due out, but political polarization and the ever more sensationalist news cycle rob such opinion polls of any useful information.