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Greece is now in a two-week polling blackout.And we just got digested an insane volume of economic data this past week, which means we’re going to head into something of a data lull.
The economic release calendar in the US this week is very sparse.
Therefore the market’s new obsession will be: The world’s central banks.
All of the biggies will be in the spotlight in some form this week.
On Thursday, Bernanke will be giving testimony to the Senate on economic policy.
On Wednesday, the ECB meets.
Here’s Bruce Kasman at JPMorgan on the ECB:
Like the Fed, the ECB has not signaled it is ready to ease but that is no guarantee that it will stay on hold at next week’s meeting. Despite a relatively small downward revision ex- pected in the staff’s growth and inflation projections, the Governing Council can take a different view on the outlook. In fact, the data flow may already have turned weak enough for the Governing Council to respond. The ECB will likely wait until July to offer a new LTRO and possibly deliver an- other policy rate cut. By then, it will know the outcome of the Greek election. It will also know what progress politicians have made at the next EU summit with regard to the growth pact and important bank support measures. And it should have more clarity about how Spain is dealing with its banking and fiscal challenges. By waiting, the ECB would keep the pressure on politicians to deliver more decisive solutions to the underlying problems. The one announcement that we do ex- pect is a confirmation that the ECB will continue to offer unlimited liquidity at its regular refinancing operations in the second half of this year, i.e., at operations with maturities of 1-week, 1-month, and 3-months.
Going back to the Fed, its next decision comes on June 20 (just after the Greek election, AKA: Fireworks time), and there’s a growing belief that some kind of action will occur. Certainly Morgan Stanley’s Vincent Reinhart thinks the odds of QE3 are quite significant.
In the meantime, it will all be about any Bernanke language, and leaks via the WSJ’s Jon Hilsenrath.
As for the others, you have a BoE meeting on Wednesday, and a Reserve Bank of Australia meeting on Tuesday.
And in Asia, you have expectations of more stimulus in China, and yen interventions in Japan. The latter could happen in anytime.
Finally, people are on guard again for some kind of big coordinated central bank move, like what we saw late last year, though it’s hard to say if we’re there yet.
Regardless: It’s all on the central banks.
Those skilled at reading tea leaves and Federal Reserve kremlinology: Your time is now.
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