BoE signaled loosening stance in its meeting while ECB said a lot that didn’t mean much of anything (how FX volatility is a bad thing – who doesn’t know that?).
Now, ECB remains the only major central bank not actively pursuing further loosening. That will change before 2010 is over.
Basically a flat day in stocks , bonds and currencies. Macro commodities (energy, base+precious metals) took a bit of whacking. Ags are having a better day with corn up and sugar having a monster day.
Tomorrow is of course the US payroll data which would rule everything. General consensus is unemployment rate to tick up from 9.6% to 9.7% BUT that there will be a gain in private payroll. The ADP data suggests that this might not materialize. If private payroll disappoints we would probably see falling USD, rallying treasuries and gold. We will hold our breath until 830AM NYC time tomorrow.
UK industry production – Surprisingly good in August
• Manufacturing output grew 0.3% in August for 4th consecutive rise about this size which makes for about 6% annual growth rate which is the highest rate since Dec 1994.
• Still, this is not enough to prop up UK economy if consumers and government sector retrench amidst uncertain economic outlook and coming austerity budget cuts.
Germany industry production – NOT losing steam
• Germany continues to defy gravity. While manufacturing has seen some slowdown since April it is still holding up at a very high level? When would the impact of currency be felt? We will see.
• As I said yesterday I am now changing my mind to say that German outperformance is likely to last longer than I thought. Say until November or December. But it certainly seems non-core Europe is decelerating sharply. And with domestic consumption looking very weak German economy cannot crank along forever. Even then – I think Germany is better situated than US.
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