On the note of central bank hiccups, global central bankers are bracing themselves for a “super taper tantrum” when monetary policies across the world finally start to diverge (that’s assuming anyone can actually begin to hike rates and risk their economy stalling). Central bankers want greater coordination between themselves to try and minimize the fallout, but onlookers warn that such coordination could be against various laws and central bank mandates.
US rate rises are looking less likely in 2015, as hopes start to fade that the economic data will bounce back in the second half of the year. The weather at the beginning of the year and the West Coast port workers strikes have left the country well below expectations on where it should be by now, with the concern that there isn’t going to be the momentum to get back to where they wanted to be as quickly. A move by the Fed in June is almost completely priced out of possibility in the futures market and the likelihood of a September hike is also diminishing, according to the same measure.
Looking to the week ahead, UK inflation tomorrow will be of interest, as will the Bank of England minutes on Wednesday. European data is dominated by PMI readings and the German ZEW survey, whereas the US sees Fed minutes, housing data and inflation.
Equity markets have got off to a poor start for the week ,with Asia generally lower and European futures not really that inspiring. Greece hope to have a deal on the table by Friday, so if that starts to look realistic we could see a big move higher on the optimism (though we won’t hold our breath).