Welcome to The Signal’s “Macrocast.” Each week, we provide analysis and forecasting on the most important upcoming central bank communications.
Bank of England
Forecast: Likely to hold rates on September 15
Analysis: With a rising trend* (momentum** 0.25) since initiating stimulus in early August, we expect the BOE to hold rates this week to continue evaluating the effects of the existing stimulus.
Forecast: Speakers to trend moderate
Analysis: Three Fed speakers are scheduled today, all of whom will express moderate sentiment, diminishing the odds of a September rate hike ahead of the Fed’s media blackout beginning on Tuesday morning. Kashkari’s recent speeches have focused on Too Big To Fail, so he is the least likely to wade into monetary policy. Lockhart is more likely to discuss policy, and, although he’s trending dovish, we anticipate he will deliver a more moderate (less dovish) speech. We expect Lael Brainard–increasingly speculated to be a possible Clinton appointee for Treasury Secretary–to deliver an uncontroversial, moderate speech pointing to the possibility of a rate hike later this year, consistent with the Fed’s slightly hawkish current stance (momentum 0.05).
European Central Bank
Forecast: Speakers to trend hawkish
Analysis: We expect Mario Draghi and Sabine Lautenschlager of the ECB, both speaking on September 13, to deliver moderately hawkish speeches consistent with the ECB’s rising sentiment trend (momentum 0.25).
Reserve Bank of Australia
Forecast: Likely to continue cautious language
Analysis: RBA policymakers Guy Debelle and Christopher Kent are set to deliver slightly dovish speeches reflecting the RBA’s current momentum of -0.31 and perpetuating the bank’s moderately dovish trend.
Bank of Canada
Forecast: To trend neutral
Analysis: After a very quiet summer, we expect BOC Senior Deputy Governor Carolyn Wilkins’ speech this week to maintain the bank’s slightly above neutral (momentum 0.08) trend.
Forecast: To trend modestly hawkish
Analysis: Due to her tendency to stay on track with the Riksbank’s aggregate trend, Cecilia Skingsley’s speech this week will likely echo the bank’s modestly hawkish posture (momentum 0.29).
* Prattle’s models are based on the historical relationship between central bank language and market reaction, which is used as basis of evaluation for future communications. The scores are normalized around zero and range between -2 and 2, negative numbers indicating dovishness and positive numbers indicating hawkishness.
** Residual scores represent the tone of a communication compared to the rolling, 12-month average for that individual communication type or speaker. Raw scores represent the tone of a communication compared to the average of all communications.
Disclaimer: the forecasts provided herein are based upon sources believed by Prattle Analytics, LLC D/B/A Prattle, to be reliable and to be developed from models which are generally accepted as methods for producing economic forecasts.
Prattle cannot guarantee the accuracy or completeness of the information upon which this Report and such forecasts are based. This Report does not purport to disclose any risks or benefits of entering into particular transactions and should not be construed as advice with regard to any specific investment or instance. The opinions and judgments expressed within this Report made as of this date are subject to change without notice.
Copyright © 2016 Prattle Analytics, LLC.