Daily update
Daily update
- The Federal Reserve minutes offered some clarity on future Fed policy. The tone is consistent with rate cuts and a soft economic landing. The Fed does not want rising real interest rates with a slowing economy. Disinflation trends were discussed (economists selectively adjust data to better identify these trends).
- The ECB policy meeting account is less likely to offer clarity. Eurozone fundamentals support rate cuts—perhaps even more so than in the US. However, the cumbersome decision-making and weak leadership mean easing rates will take time. Today’s release will be examined for signs of, which could delay policy action.
- Japan’s equity market hit a new high, exceeding the 28 December 1989 level. In December 1989, “Back to the Future II” was playing across cinemas, in which Japanese corporations were (problematically) depicted as dominating the year 2015. Equity strategists will be excited by the drivers of the current equity high. Economists might reflect on the dangers of extrapolating from past economic trends when forecasting future economic success.
- China’s policymakers have reportedly banned large institutions from reducing equity positions at the start and end of each trading day. This is of course an asymmetric policy—there is no suggestion that firms would be banned from buying equities.
