In case we needed another reminder .... "normal" rules do not necessarily apply

ref :- " Poor inflation data cloud Fed's next rates move " , The Financial Times , and "Bond Traders Betting on a Fed Rate Cut Won't Be Easily Dissuaded", Bloomberg Markets It's a busy week in store .... loads of important data and the Fed's two-day monetary policy meeting on Tuesday and Wednesday. Once again, there's no chance of any change in rates but it's what we might learn about the Fed's current thinking on monetary policy that will be key. Talking of data, Friday saw the release of the US 1st quarter GDP number .... which posted much higher-than-expected annualised growth of 3.2% (expected to show 2.3%). Now in the old days, that kind of upside surprise could have been expected to pr

Back to the Future… Have we been here before?

ref: - "Rates Traders May Be Thinking of a 1998-Style Fed Rate Reduction”, Bloomberg Business For all the recent ebullience in US equities, if there's one thing the economic commentaries are not short of its doom-mongers. Well, it's not as though there aren't plenty of reasons to take a dark view of the economic future should one be so inclined, and more disappointing data from Germany yesterday only confirmed the fact that the Eurozone, in particular, faces a real struggle to recapture the path to solid economic growth. Europe is by no means alone but sometimes one has to look past the worried faces and remind oneself of exactly where we are right now. Anyone doing that might notice that th

"The 5yr /5yr inflation swap rate" - it may sound a bit of a mouthful, but it's just a

ref: - "Decline in inflation outlook raises pressure on ECB to act", The Financial Times, International Section Right... First up, let's get the definition out of the way. If you google it, you might be amazed at how many ways there are to say the same thing but we've plumped for the simplest: "The five-year, five-year inflation swap rate is a measure of the market's EXPECTATION of inflation over five years, starting in five years’ time". If you're new to markets and find the very sound of a 5yr / 5yr forward inflation swap a bit intimidating, don't worry... we're not going into the mechanics of it (though they're a lot more straightforward than one might think) and besides... you wouldn't b

The ECB and its TLTROS ..... and Aramco's spectacular bond sale.

Increasing supply without increasing demand is a bit like pushing on a rope .... not very effective. ref :- "ECB loans fail to ignite bank lending" , The Financial Times, Markets and Investing It's another decision day for the European Central Bank today .... don't expect any changes to headline policy but DO expect plenty of rhetoric about the increased risks to the Eurozone economy. With such a list of dark clouds to consider -- Brexit, Trump escalating trade disputes, Italy in recession, German manufacturing in something of a slump and the IMF slashing global growth forecasts -- it would be amazing if the tone was anything other than sombre. It was already pretty sombre last month, wh

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