ECB after the dovish Fed: QE extension virtually a done deal, expect further efforts to forestall EUR upsides

The Fed’s apparent dovishness, with markets pricing a delay in hiking until 2016 (see my accompanying post) on balance increases the likelihood that the ECB will on 3 December announce an expansion or (more likely) and extension of their QE programme (PSPP) beyond September 2016 end-point.  As I anticipated, Draghi opened the door to such … More ECB after the dovish Fed: QE extension virtually a done deal, expect further efforts to forestall EUR upsides

Dovish Fed highlights challenges facing central banks, volatility spike could only be delayed

The Fed’s dovish hold decision on Thursday set the cat amongst the pigeons in fixed income markets and sharply highlighted the challenges facing the world’s central banks given that: (i) the post-crisis EM debt boom encouraged by advanced economies’ QE policies – BIS report that USD-denominated loans to EMs have doubled to $3 trillion since … More Dovish Fed highlights challenges facing central banks, volatility spike could only be delayed

MPC sticks to optimistic script: GBP prospects depend on risk appetite

Today’s minutes signified the MPC in ‘wait and see’ mode but with a mildly hawkish tinge of (again) downplaying China risks, re-iterating the strong underlying UK domestic position and nuancing recent initially apparently negative labour market developments. This disappointed some market hopes of an MPC volte face and generated a small GBP bounceback. There seem … More MPC sticks to optimistic script: GBP prospects depend on risk appetite

USD and Fed Rate Hikes: More Complicated Than Simply ‘buy the rumour, sell the fact’

Fed comments at Jackson Hole indicate that they are in wait and see mode about both domestic data and financial market/China stresses. But for now they’re apparently sticking to their 2015 liftoff plan and not ruling out a September rate hike. Specifically, Stanley Fischer argued “Given the apparent stability of inflation expectations, there is good … More USD and Fed Rate Hikes: More Complicated Than Simply ‘buy the rumour, sell the fact’