Thursday, 19 November 2015

A few macro stories today

A few brief macro stories today...

Federal Reserve – agree with this reading/interpretation: ‘On balance, the Fed has effectively put the market on notice that a December hike is coming. However, there was a high level of uncertainty about the policy path thereafter, suggesting a more dovish post-liftoff policy response function’

Of course not a slam-dunk anything in December will happen:

FX response - According to Bloomberg, the US currency is down against all of its 10 major global peers, as well as its Asian counterparts and as shown below the DXY fails to break through 100 again. Euro back to 1.07 against the US$. Recall that US$ tends to fall in 6 months after initial US interest rate rise...

Japan - In Thursday's statement, the BoJ said the economy "has continued to recover moderately, although exports and production have been affected by the slowdown in emerging economies."
They also noted they will continue QQE Until Stable 2% Inflation Maintained but that easing Is Exerting Intended Effects

Japan still feels highly likely to increase QE to me... Ironically opening up to more Chinese tourists helps...(and other liberalisation/supply side reforms): 

Talking about China - The MNI China Business Indicator fell 10.3 per cent this month, to 49.9 - just below the 50 threshold needed to indicate optimism. The forward looking New Orders component fell by 6.6 per cent, while the Production component fell 4.2 per cent (via Fast FT).  Volatile...

Of course maybe the solution - consistent with the Japan observation above - is more Chinese spending.  Certainly whilst debt has gone up this has been predominately in the corporate and government areas not consumers.  

However interesting that something consumers are spending on in China is a ‘bullion binge’ (link here).  

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