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A Considerable Time…

A Considerable Time…

There are two things which seem to have headlined the market news in the last few months. Number one is the US and when we can expect an increase in the interest rates. Number two is Mario Draghi and the question of Quantitative Easing. Both of these stories seem to have been gaining momentum for quite a while now and it looks like we may finally get a bit of traction.

Following on from last week’s highly impressive NFP, the signs are that the US economy is going in the desired direction and this may well change the Fed’s stance. When talking about an interest rate hike, there has always been the explanation that rates would increase “a considerable time” after QE ended in October. It is now being anticipated that this term will be removed from future debate, meaning the market can prepare for the next step in the normalization of the US economy.

In the Eurozone, things don’t appear to be getting any better for Mario Draghi and the cloud of QE is constantly hovering over his head. Whilst oil prices are falling, this isn’t overly aiding the European economy and possibly the best case scenario is a 5% weakening of the single currency which could add 0.3% to Eurozone GDP.

A further headache for the Eurozone is likely to come from Greece where President Samaras has brought the Presidential Election forward by 2 months. The Syriza Party, which is the current favourite, are not overly keen on the deal that was done by Samaras’ government and its lenders, and would put the remaining bailout payments and future deals into jeopardy which in turn would destroy the fragile confidence the markets have in Greece and cause contagion in the rest of the Eurozone.

Headline data today includes: Manufacturing and Industrial Production from the UK, GDP estimates from the US and also wholesale inventories.

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