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Thursday, July 11

11th Jul - EU Open: Post-Minutes Confusion

Previously on MoreLiver’s:

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News roundup – Between The Hedges
The 6am Cut London – alphaville / FT
Emerging Markets Headlines – beyondbrics / FT
Asia Morning MoneyBeat: After Brief Pizzazz, U.S. Stocks End Mostly Flat – WSJ
Europe Morning MoneyBeat: Equity Strength Forecast As Bernanke Reassures – WSJ

3 Numbers to Watch: ECB report, US jobless and consumer comfortTradingFloor
The ECB releases its monthly economic report today, followed by the weekly update on US jobless claims and the US Bloomberg consumer comfort index.

Market Preview: Bernanke lifts market sentimentTradingFloor
Ben Bernanke’s comment that the existing monetary policy stance is needed in the near term is likely to lead European markets to open sharply higher Thursday. Going forward today, the ECB’s monthly report and the US jobless claims data will be eyed.

Danske DailyDanskeBank (pdf)
Main focus are the minutes from the June Fed meeting released yesterday and dovish comments from Fed chairman Ben Bernanke suggesting that Fed tapering in September is not a done deal. US bond yields are markedly lower and USD has weakened significantly. As expected Bank of Japan did not announce any easing measures in connection with its monetary meeting.

Market comment: Bernanke’s reassurance to push yields further downNordea
Bonds rally after Bernanke’s reassuring comments * Fed minutes leave the door open for tapering later this year * Bernanke reassures accommodation will continue * Sell-off pressure for bonds likely to ease for now * Messy politics continuing in Italy * New 7-year bond from the EFSF * US jobless claims and more central bank speeches on the agenda * Italy and the US to sell bonds

Bernankelta rauhoittelevia sanoja * Japanin keskuspankki näkee talouden piristyvän


The Eurosystem Needs Analysis Project funded by the European UnionECB
Speech by Jörg Asmussen, Member of the Executive Board of the ECB, Skopje, 10 July 2013

Spain's Slush Fund ScandalZH

An argument for forward guidance in the UKmainly macro

Should the Fed Be Moderate?esoltas

Bernanke Sets Cat Among the PigeonsMarc to Market
The FOMC minutes did not appear as hawkish as many expected…The consensus that emerged in recent weeks was for the Fed to announce a slowing of purchases of long-term assets at the September FOMC meeting that would begin in October. The market had also moved to discount a good chance of the first hike in the Fed funds rate in late 2014 or early 2015. Bernanke's comments gave the market reason to re-evaluate.

Minutes muddy waters – USD sings the bluesTradingFloor
Michael O'Neill: The seemingly contradictory FOMC minutes in an FX environment a tad long of dollars and a tad light of liquidity sparked some sharp US dollar losses.

Fed Chairman Bernanke's two-tier approach to normalizationTradingFloor
Steen Jakobsen: Bernanke now has a two-tier approach to normalisation: Accomodative monetary policy and a macro-prudential framework (regulation and margin call). The Fed is left just communicating with the market - a sign of desperation, but a 1700 S&P awaits first

FOMC minutes and Bernanke’s dovish speechTradingFloor
Juhani Huopainen: The minutes of the taper-bomb FOMC meeting of June were not as hawkish as had been feared. The market had anticipated softer minutes, but it was Fed chairman Ben Bernanke's speech and press Q&A afterwards that really provided the dovish goods

From Minutes To BernankeTim Duy’s Fed Watch
There is enough material today for everyone to walk away believing their priors.  The mass confusion within the FOMC minutes alone suggest substantial factions on boths sides of the taper/don't taper debate.  That said, I think it is difficult to walk away from today's events with a sense of certainty about the September taper.  But I also think that the minutes suggest that someone brought a divided FOMC together around a common plan - a plan to put the taper on the table sooner than later but attempt to walk a tightrope with respect to interest rate policy.  And I can't see how that someone is anyone but Bernanke. 

Currencies Go Berserk As Bernanke Kills King DollarZH

(see also last night’s post for more on the Fed)

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