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Friday, May 22

22nd May - Draghi "structural-only", US CPI jumps

Previously on MoreLiver’s:

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Fischer: Past, Present, and Future Challenges for the Euro AreaFED
Fed’s Fischer Calls for Greater European Fiscal Integration – WSJ
Fischer says euro area can survive crisis – FT

Ifo drops only marginally in May – Carsten Brzeski
German IFO unchanged in May – TF

Cameron warns of long path to EU reform – FT
Cameron’s EU reform push is very different to Greece’s negotiation – Open Europe

Eurozone tells Greece no deal without IMF – FT

EU periphery holds while centre falls apartFT
QE has induced volatility in German bonds and relative calm elsewhere

Graphics: Eurozone Bonds’ Wild RideWSJ
The eurozone crisis has led to an unprecedented era in European bond markets.

Taking stock of the VaR shockBNP PARIBAS
In the first two weeks of May 2015 yields of US Treasuries and German Bunds have showed some tentative signs of stabilization after rising sharply in recent weeks. While it is too soon to conclude that volatility will subside, it is an opportune time to survey the broader market impact of the rise in 10-year yields to multi-month highs.

Juhani Huopainen: Expect Draghi to go epic after Fischer's roastTF
The ECB's annual forum got off to a rocky start after the US Fed vice-president Stanley Fischer basically said the euro was a mistake, crisis management was too slow and the monetary union has no future without fiscal integration. This is what I think ECB president Mario Draghi believes, so I expect his speech today to go all-in, just as he did in July 2012 and in 2014 in Jackson Hole.

Draghi: Structural Reforms, Inflation and Monetary PolicyECB

Eurozone Reform Will Make QE Look Easy WSJ

ECB's Willful Ignorance: Leaking Central Bank Says Austerity "Compliments" QEZH

GDP Seasonal Adjustment: There's No Smoking GunThe Fat Pitch
Summary: First quarter GDP growth was stronger than originally estimated. When adjusted for seasonality, the economy grew 1.8%, which is consistent with the average growth rate over the past three years. It is also consistent with a wide variety of economic data (employment, wages, housing, consumption) released in the past several months. And, finally, it is consistent with the message being sent by the treasury market.

More Cautious FOMC Looks Set For A September TighteningAlpha Now
The FOMC is uncertain about the persistence of the weakness in Q1 and its implications for the timing of any policy tightening. The Q2 rebound looks set to be weaker than we had assumed in our latest quarterly forecast, as the benefits of lower oil prices are taking longer to come through. But looking ahead, household expenditure should be supported by further strong gains in employment, and higher wage growth. We retain our view that the Fed will tighten by September. But a move as early as June looks far less likely than it did just a month or two ago.

Core U.S. Consumer Prices Rose in April by Most in Two Years – BB
Core Consumer Prices Jump Most Since March 2006 Thanks To Surging Healthcare Costs – ZH
BLS: CPI increased 0.1% in April, Core CPI increased 0.3% - Bill McBride
Illiquid Markets Turmoil After Hotter-Than-Expected Inflation Print – ZH

BoJ: policy steady but tough choice aheadNordea
As expected the BoJ left the QQE programme unchanged today and revised up its growth assessment. We still expect an expansion of the QQE in Q4 this year because inflation is likely to fall behind expectation. Both the market and some BoJ members have voiced doubt about reaching the inflation target. The BoJ faces a tough choice ahead.

Bank of Japan on autopilot at least until autumnDanske Bank

Daily Central BanksWSJ
Blackstone’s Take: ECB Turns Up Heat on Governments * Fed Proposes Relaxing Rules Impacting Municipal Bonds * Fed’s Fischer Calls for Greater European Fiscal Integration * ECB’s Mario Draghi Urges Economic Overhaul in Europe * BOJ Kuroda Strikes Positive Note on Econ, Sees No Need for Easing

Daily MacroWSJ

Danske DailyDanske Bank

Global DailyABN AMRO
Eurozone composite PMI falls due to a drop in the services sector PMI… but there are good reasons to expect a strengthening economic recovery * ECB meeting account stressed commitment to implement QE in full

Yellen in the spotlight, decoupling of EUR and USD rates, USD little changed * US CPI inflation to remain negative * Impact of ECB’s frontloading move already starting to fade?

Morning MarketsTF
European Central Bank president Mario Draghi may well come out swinging this morning after the US Fed's Stanley Fischer could not resist a swipe at the whole euro project last night. Expect potential EURUSD fireworks if the language gets tasty.

Daily FX CommentMarc Chandler
Dollar Heavy into the Weekend

Daily ShotTF
Amid the weak euro the Eurozone shows improvement while earnings growth in the US is slowing down and PMIs there are falling.

Brussels PlaybookPolitico

Chinese Stock Bubble Frenzy Returns; US Futures Flat Ahead Of Today's Pre-Holiday Zero Volume Melt Up

FX UpdateTF
The USD rally couldn’t find any fresh fuel yesterday and overnight, as the market looks toward today’s US CPI release for inspiration. The Bank of Japan meeting saw a mild upgrade to the rhetoric describing the economy, and drove a modest JPY rally.

From the FloorTF
Crude oil is holding to its gains, helping to push US oil prices over the $60/barrel mark overnight

Martin Sandbu’s Free LunchFT
Methods and madness in economics: Rift breaks open over accusation of 'mathiness'

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