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Wednesday, March 18

18th Mar - Fed presents a dovish surprise

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How many assistants do MEPs employ?Jonas Jancarik
On average, MEPs have 2 assistants in Brussels and 3 in their home country * MEPs from Lithuania and Poland have by far the most assistants * Lithuanian MEP Antanas Guoga employs the most (29) while 32 MEPs have no assistants in Brussels

Germany Economic Outlook: broad based growthNordea
We expect broad based GDP growth of 1½% to 2% for both 2015 and 2016. Private consumption will be the most important growth driver. Consumer prices will likely rise a bit faster than in the Euro area, reflecting Germany’s more advanced cyclical position.

Denmark: DN raises banks' current account limit to DKK145bnDanske Bank
Speculating on Denmark’s Krone? You Have Been Warned. AgainWSJ

The Riksbank cut rates and is likely to do moreNordea
In a surprise move, the Riksbank cut the repo rate today by 0.15 bp to -0.25%. Also, the bond purchase programme was extended by SEK 30bn. Moreover, the Riksbank says that it is prepared to do more, even between monetary policy meetings.

Riksbank take-awaysNordea
The rate cut today (15 bps) was larger than the size of the rate cut in February (10 bps), and measured in interest-rate risk, QE2 could be up to 10 times larger than QE1 in February. In this perspective, both the drop in 10y yields and in the currency actually seems somewhat muted relative to the reaction after QE1.

The Swedish Shocker: Will It Work? – WSJ
Sweden Slides Further Into NIRP: Cuts To -0.25%; Expands QE – ZH

Stronger GBP could prolong low inflation – BoE minutes review – Nordea
The minutes of the Bank of England’s March MPC meeting had a dovish twist, as policy makers voiced concern that continued strength of the UK economy could further strengthen the GBP and increase the risk that low inflation will persist. The BoE is still in no hurry to start normalising policy.

Bank of England Sounds Alarm on Pound – WSJ
The appreciation of sterling worries the MPC – Danske Bank
5 Takeaways from the U.K.’s 2015 Budget – WSJ

Greek Bulls "Throw In The Towel... They've Gone Plain Nuts" – ZH
Are Greek Capital Controls Now Inevitable? – ZH
IMF Considers Greece Its Most Unhelpful Client Ever – BB
Grexit Contagion Resumes After IMF Slams "Most Unhelpful Client Ever" – ZH
ECB Prepares For Grexit, Anticipates 95% Loss On Greek Debt – ZH
How likely are capital controls in Greece? – Open Europe
Negotiations with Greece Close to Breakdown as Budget Strains Worsen – Yves Smith
Tsipras demands EU stop 'unilateral actions' – Reuters
ECB Said to Grant Greece Less Emergency Liquidity Than Requested – BB

Recent movements in the effective exchange rate of the euro – ECB
ECB's Celebration of Its New $1.4 Billion Tower Is Spoiled by Protesters – BB
Weak euro, meet the ECB’s inflation forecasts – FT
EZ QE: features and bugs – Tony Yates

FOMC Preview: Yellen Fed less patient than market expects?TF
The prime risk to a hawkish outcome is any prominent mention of USD strength * A Bloomberg poll found 69% of economists want the word “patient” removed * Market swings after this meeting could prove significant, so care is needed

Dalio Thinks Fed Can Repeat 1937 if it raises rates too fast BB

Stephen Pope: Which way will Janet jump?TF
Soaring USD hurting US exporters * EURUSD likely to achieve parity * Oil not likely to rebound soon

Juhani Huopainen: Expect rate-hike signaling – with a softenerTF
Fed is clearly in a tightening mood, but is realistic * Expect Fed to remove 'patient' and introduce less steep rate path * USD and stocks already corrected, and could be ready to strengthen

Hidden Message of the Fed's Dot PlotBB

Patient: Fed may drop the word, not the ideaReuters

Future Threats, Not Present Danger, Counsel Caution on Raising RatesWSJ
The U.S. economy will be better-positioned for the next recession if interest rates are higher when the downturn starts. Paradoxically, the best way to achieve that may be to keep rates lower now

FOMC March policy statementFED
Economic projectionsFED
Statement trackerWSJ

Macro Live, FOMC presser edition – FT
Live Blog: Fed Decision and Janet Yellen’s Press Conference – WSJ

Fed Drops ‘Patient’ Stance, Opening Door to June Rate Increase – BB
Fed opens door further for June interest rate hike – Reuters
"Flexible" Fed Loses "Patience"; Cuts Growth, Inflation Forecasts – ZH
Reaction: Buy Stocks, Buy Bonds, Buy Gold, Buy Crude Oil, Sell Dollars – ZH
The Reason Why Stocks Are Soaring, Or Farewell "Recovery"... Again – ZH

Fed signals that higher interest rates are coming – WaPo
Federal Reserve: No Patience Does not Mean Impatient – Marc to Market
Goldman: More Dovish Than Expected But Hike Coming In September – ZH
Fed Trims Back Estimates Of Interest Rate Rises Amid Big Forecast Changes – WSJ
Yellen: Strong USD Holding Down Exports and Inflation, But Reflects Strength – WSJ

Fed Officials See Slower Inflation Pickup Than Private Economists Do – WSJ
Three Things I Think I Think – Fed Decision Edition – Cullen Roche
Yellen Sends Odds of Any Rate Increase Below 50% Until December – BB
Fed cautious on rate hikes – ABN AMRO
No Decisions Yet About Timing Of Fed’s Reinvestment Process End – WSJ

Economists: ‘No Longer Patient, But Definitely Not Impatient, Yet’ - WSJ
The Fed Doesn’t Think the U.S. Economy Is at Full Employment, After All – WSJ
5 Highlights From Janet Yellen’s Press Conference – WSJ
Fed’s Covert Foray Into FX Policy Risks Wider Currency War – WSJ
Panic Buying Of Everything; Dollar Plunges Most Since 2009 – ZH

Yellen Strikes a Dovish Tone – Tim Duy’s Fed Watch
Redacted Version of the March 2015 FOMC Statement – David Merkel

China Watch – Managing the slowdownABN AMRO
Recent data confirm the ongoing weakness of domestic demand, although these are partly distorted by the Chinese New Year. We expect the authorities to keep adding measured monetary and fiscal easing to prevent a hard landing. Our 7% growth forecast for 2015 is in line with what was recently announced at the National People’s Congress. Recent steps to manage local government debts are positive, although China’s ‘deleveraging path’ will likely remain lengthy and wobbly.

China Economic Outlook: growth countdown has reached 7Nordea
Beijing’s growth tolerance has been reduced to 7% * Plenty headwinds suppress future growth * Policy stimuli are able to prevent an abrupt slowdown * CNY has not joined the currency war

Daily Central BanksWSJ
Douglass Take: BOE Policy Makers Share Worries Over Stronger Currency * Feds Bid for Flexibility on Rates Sets Stage for Market Volatility * Five Things to Watch in the Fed’s March Meeting * Economic Data Complicate Fed Rate Deliberations * Blockupy Protests Break Out in Frankfurt as ECB Opens New Building

Daily MacroWSJ
Fed expected to remove “patient”, Yellen to explain whether to expected action in June, or later, strength of the dollar could be mentioned * Bank of England highlighted its concerns about the strength of the pound.

Danske DailyDanske Bank

Global DailyABN AMRO
The fall in the euro will drive up import prices, leading to upward pressure on inflation in 2016 * German ZEW influenced by QE programme, with growth and inflation expectations up * Eurozone labour market conditions slowly improving – trend should continue

Fed to remove “patient” barrier for rate hike * Signs of EUR rates markets getting used to QE * Markets pare USD-bullish bets ahead of FOMC decision

Daily ShotTF
Chinese housing prices continue to slide, with many appearing to believe the stubborn price activity will force Beijing to prop up the economy. Meanwhile, Brazil's troubles continue to mount as India appears to offer a note of promise in the emerging markets sphere.

Daily ShakeupOpen Europe
Moscovici: We won’t keep Greece in the Eurozone at any price * Senior SPD and Green politicians open to paying Greece additional war reparations * Thousands of protesters clash with police at opening of new ECB headquarters * Commission: Member states’ right to decide their own energy mix should be respected * EU likely to delay sanctions decision on Russia as Ukraine pleads for more financial support * Centre party enjoys comfortable polling lead ahead of April’s Finnish parliamentary elections * Bank of England’s Brazier: UK has significantly influenced EU bank rules * 13 Cypriot MPs owe Bank of Cyprus €35.3m in non-performing loans * European Commission proposes forcing EU states to share tax deal information

Futures Weak Ahead Of "Impatient" Fed, Oil Slide Continues; China Stocks Go Berserk

From the FloorTF
Nintendo mobile partnership boosts stock by 21% * EURUSD volatilities rising ahead of FOMC meeting * June rate hike? Not likely, says Koefoed * FedEx earnings a test of shipper's global bull case * Brazilian, Russian yield curves soar on perceived risk

Martin Sandbu’s Free LunchFT
Economy watchers and '30s throwbacks - Obsession with Fed lift-off date misses the essentials

BIS Quarterly Review: A wave of further easing / March 2015BIS
Special features on "The costs of deflations: a historical perspective", "Oil and debt", "Bank business models", "(Why) Is investment weak?", "Financial inclusion - issues for central banks" and "Shifting tides - market liquidity and market-making in fixed income instruments". [press release]

BIS Questions Deflation Threat – WSJ
How dangerous is deflation? – FT
BIS Sees Financial Inclusion Increasing Central Bank Powers – WSJ
The Economist’s Interview: Tim Geithner [30 min]– Youtube
The Economist’s Interview: Peter Thiel [30 min] – Youtube

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