Reminders of the bloomin' obvious ......
Time is a little short so, in the unlikely event that anyone might have forgotten what to look out for today, we offer a couple of brief reminders. Apologies to those already waiting with baited breath .....
After the close of European markets (18.00hrs GMT), the US Federal Reserve will give us its much anticipated decision on interest rates, its policy statement and its economic projections, to be followed 30 mins later by the usual press conference. Not much more than a couple of weeks ago, the chances of a rate hike were little more than 30%. We know now that a hike of 25 basis is nigh-on guaranteed -- and consequently already priced into the markets.
So with that weighty issue a foregone conclusion, the devil will be in the detail -- isn't it always ? Attention will be focused very firmly on the Fed's projections, and whether the forecasts of the individual members of the Fed's Open market Committee (the famous "dot-plot") have changed since December. Back then, on balance they went for 3 rate hikes this year, which was one more than the median market estimate at the time.
Just because the market has upped its expectations to three, it does not necessarily follow that the Fed will up theirs to four. One could expect Chair Janet Yellen to stress a continued "gradualist" approach to tightening monetary policy with three increases remaining as the Fed's base-case for now. Remember that the Fed's decisions are formed from the data available and current conditions and not from the perceived implications Mr Trump's fiscal stimulus -- at least not until the details of that package are finally released. Anything more hawkish from Ms Yellen or the FOMC would presumably allow the dollar to reassert itself once more but do no favours for bond markets.
Watch out also for any reference to a plan to reduce the size of the Fed's balance sheet, a form of monetary tightening in itself. With bond markets jittery enough as it is, it might be dangerous to even mention the possibility of the Fed offloading bonds accumulated through its Quantitative Easing programme. So maybe no detailed discussion of the subject this time then, but the subject can't be avoided for ever.
Also today of course is the election in the Netherlands. Polls close at 20.00hrs GMT, and the smaller constituencies will post their results very quickly, possibly little more than an hour later. We should even know about the bigger, urban districts by the early hours. Exit polls are generally pretty reliable in Holland, but then again faith in polls has been shaken wherever you look.
The most recent poll that we've seen shows PM Rutte (VVD) party gaining more from his handling of the spat with Turkey that the anti-immigration, anti-Islam Geert Wilders party (PVV). According to this poll, the VVD is now slated to get 28 seats, with the VVD taking 24 after leading the polls for the best part of 2 years. Both these estimates look a little toppy compared with earlier polls.
The are 150 seats up for grabs (theoretically 76 needed for a majority). With 28 parties represented, 14 are expected to get at least one seat and eight are hoping for 10 or more. You can see why coalition government really is the only way forward, and even ignoring his recent slip in popularity Mr Wilders would never get another party into a coalition with him even if he should top the polls after all. But the number of seats he gets is crucial as a measure of the progress of a Europe-wide populist tide that will affect elections in France, Germany and even Italy next year.