Patience Has Run Out
Germany and Greece take centre stage in Europe today as German ZEW Survey figures are expected to advance for the fifth consecutive month. This may not boost the Euro, however, as it could be improving due to the Eurozone stimulus programme.
Greece continues to feel the financial squeeze as it needs to start paying back its debt. The Syriza government is burning through cash whilst trying to get its creditors to give them more money from the bailout plan. The Greeks and Eurozone are still at loggerheads, with the ECB and the Germans in particular seemingly disbelieving of Tsipras and his government’s plans. This story seems set to run and run…
One story that seems to be coming to an end is that of “patience” by the Federal Reserve. Since 2008, the Fed has promised to remain “patient” about raising interest rates but as the two day Federal Open Market Committee meeting starts today, it looks like this is going to be removed from its guidance. This means that from June, the Fed will be allowed to increase rates as and when it deems necessary, judged entirely on the data it has in front of it. This could increase volatility and return economic policy to normalization as not knowing where interest rates are heading from month to month is part of this process.
Lots of data out this morning including Eurozone CPI and German ZEW Survey and this afternoon we have housing starts and building permits from the US.