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Tuesday, April 30

30th Apr - US Close: Fed certainly not, ECB maybe.

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Roundups & Commentary
Markets – Between The Hedges
Daily Interest Rate Monitor – Global Macro Monitor
The Closer – alphaville / FT
US: Macro Collapse Pushes S&P 500 To New All-Time High – ZH

Which way for the ECB?Bruegel
Ahead of the ECB meeting, the debate on the right course for euro area macroeconomic policies has re-emerged. An interesting new feature of the debate is about differentiating monetary policy to better cater for different conditions in different countries of the euro area. So should there be more differentiation of monetary policy across countries and how much can monetary policy achieve?

Draghi will act to avoid deflationary spiralSober Look´
The ECB will have no choice but to ease policy and possibly prepare for more drastic actions. The Eurozone is facing a growing risk of deflation - similar to Japan. Once the inflation rate fell below 1% in Japan, the external shock of the Asian currency crisis (late 90s) sent Japan into a deflationary spiral.

Spain still in deep recession but is improving slowlyTradingFloor
Mads Koefoed: There is still a long way to go for Spain, but the economy saw improvement in the first quarter of 2013. We look for further improvement in the coming quarters, but there will be no escaping the claws of recession this year.

Letta's Italy?Marc to Market
The first left-right coalition in Italy since 1946 has survived its first confidence motion in both chambers. As difficult as it may have been to break the political logjam, the hard work lies ahead for Prime Minister Letta.

Italy's Letta tells Merkel Europe needs more growthReuters
Italian Prime Minister Enrico Letta, fresh from winning a confidence vote in parliament, told Germany on Tuesday his government would meet its budget commitments but expected Europe to drop its austerity mantra and do more to lift growth.

Euro-Area 1.2% Inflation Adds Pressure for ECB Rate CutBB
Euro-area inflation at a three-year low and record unemployment increased pressure on the ECB to cut interest rates later this week to spur lending and growth.

Euro-Area Unemployment Increases to Record 12.1% Amid Recession – BB
Record jobless in Euro zone pushes ECB to act – Reuters
Europe's Scariest Chart Leaves 1 in 4 Young People Unemployed – ZH
Europe bleeds out – Free exchange / The Economist

361 Capital Weekly Research BriefingThe Big Picture

Fed unlikely to expand QE – FOMC previewNordea
Despite the recent round of weak data we do not expect an overly dovish tone to the post-meeting statement tomorrow. Still, a potential surprise would be if the FOMC is worried about disinflation.

FOMC preview, May 2013Money Supply / FT
This FOMC meeting is unlikely to generate much action beyond tweaks to the language on the economy. The next move is still likely to be a taper of QE3, but unless there is a rapid turn in the data, September now seems the earliest plausible date.

Why the Fed probably won't expand QE on WednesdayWP
1) Fed leaders have been sensitive to the risk that through the quantitative easing they could completely take over the market for U.S. Treasury debt 2) Maybe quantitative easing doesn’t affect the economy so much on its own terms, by pushing money into the financial system. Maybe it is more important as a communications tool.

Chicago PMI Implodes To 49, First Sub-50 Print Since September 2009 – ZH
Looking for Inflation? It Vanished – WSJ
Home prices rise, seen helping economic recovery – Reuters
Consumer Confidence: WSJ, Reuters, BB

EURUSD – technical momentum favouring upside, but...TradingFloor
John J Hardy: More poor data out of the US has the USD on the defensive as the market begins to price in a dovish FOMC tomorrow. With EURUSD pulling to the highest levels in almost two weeks, we look at the scenarios from here.

Austerity exposes the global threat from tax havens – The A-List / FT
Jeffrey Sachs: The curtain has been pulled aside on the once secret world of tax havens, and the scale of abuse is nearly beyond reckoning. Week after week, Americans and Europeans worn down by budget austerity have learnt about the secret accounts of their politicians, tax evasion by leading companies and hot money destabilising the world economy. The darker truth is that these havens are not gaps in the world’s financial system; they are the system.