Daily update
Daily update
- Yesterday’s pontification of Federal Reserve speakers created a stir in bond markets. There were a range of views expressed, from “keep on cutting” to “more gradual cuts”. Markets, rendered skittish by Fed’s “data dependency” on undependable data, have raised yields. US inflation is down one percentage point since last December, which would justify a similar reduction in rates over the course of this year.
- Bank of England Chief Economist Pill has been expressing concern about undependable data in the UK (labor market data specifically). Fewer than one in five companies answer the UK’s labor force survey questionnaire, rendering the data unusable. Pill is right to be critical, but it is worth noting that the UK’s data quality issue is part of a wider global problem.
- There are yet more central bank speakers today—ECB President Lagarde, Bank of England Governor Bailey, and assorted other (mainly ECB) speakers. There are fewer questions about the ECB or the BoE reducing rates, but the sudden nervousness of bond markets gives more emphasis to the cacophony of central bank speak.
- UK debt-to-GDP ratios were revised lower, and tax revenues grew more strongly in September. It is a timely reminder that debt metrics are rarely very dependable.
