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 5/10 Good --- clausvistesen.squarespace.com http://clausvistesen.squarespace.com/alphasources-blog/rss.xml
Saturday, July 05, 2008 --- 55 days ago http://clausvistesen.squarespace.com/alphasources-blog/2008/7/4/the-ecb-a-token-
 (This entry is also posted at the RGE Euromonitor blog) I don't know how many of my readers are dedicated followers of the day-to-day rhythm of market movements but with an important US unemployment report and a much awaited ECB interest rate decision to think about I imagine that many a trader and broker spent a good part of yesterday holding their breath. In the former case the data confirmed that the US economy is stuck knee deep in stagflation as unemployment held stubbornly at that 5.5% "statistical quirk" while payrolls registered the sixth consecutive month of job losses, shedding 62.000 jobs. If the latest US employment data may have raised an eyebrow here and there, the decision taken by Trichet and his governing council almost certainly will not have (introductory statement here ) since the 25 basis point hike was more or less expected by everyone. As I suggested earlier this week the quarter point increase was never really in doubt, and attention was focused on the extent to which Trichet would use the opportunity of the "pre-announced" increase to lock market expectations in to an expectation of further rate tightening. Personally I was always skeptical about this possibility, and in particular given the numerous off the cuff commentaries emanating from members of the governing council that 4.25% constituted some kind of magic nominal rate to anchor inflation expectations. Yesterday's accompanying statement from Trichet on ... |
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