HANGING ON EVERY WORD
We are again back to a period when the markets hang on every word uttered by a central banker. Anecdotally, we have seen an increase in inquiry around central bank expectations and their potential impact on varying asset classes, so we know it’s the topic du jour. This very may be the theme that drives us into the end of the year, as the most market moving events over the past few weeks can be attributed to CB speak. The main actors have been the Fed, ECB and Bank of China, while supporting roles were given to the central bankers in Japan, Canada, Brazil, Turkey, New Zealand, Sweden and Mexico. The overwhelming commentary has been of the dovish bent during many of these recent meetings, with bankers either announcing new QE measures or signaling their willingness to act further (ECB, China, Riksbank, BOJ). Even countries facing inflation and weakening currencies (Turkey, Brazil, Mexico) have remained on the sidelines, partially swayed by potential actions from the larger central banks.