This post previews Janet Yellen’s 26 August Jackson Hole appearance, and the likely market implications. The main points are: Recent FOMC mixed messages – Dudley’s/Fisher’s recent small hawkish drift versus Williamson’s/Bullard’s dovishness, reflecting the difficult issues confronting the Fed – underpin market confusion about Fed policy. Neverthless, markets remain sceptical about the likelihood of further US … More Yellen at Jackson Hole: Don’t Rock the Boat?
This post previews Thursday’s MPC decision and discusses prospects for sterling. The main points are: (i) markets are under-pricing the chances of MPC rate cuts on Thursday and, especially, in August/November. A full 25bp rate cut is not priced by end-year despite Carney’s strong indication of action during the summer. Moreover, immediate action would usefully support … More Markets under-pricing post-Brexit MPC easing: further £ falls as economic weakness trumps recent reduced political uncertainty
Recent oil price falls (and prospects of more) combined with a sequence of disappointing real-side data, seeming to contradict Poloz’s “faster not larger” view, mean that a dovish Bank of Canada surprise seems likely on 15 July (when the Monetary Policy Report is released). Markets seem to be pricing in around a 50% chance of … More Risk-management Bank of Canada rate cut likely on 15 July