The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

Following the very dovish FOMC statement, the odds of a 25 bps rate hike by April have fallen to 36% from 54% yesterday and the odds of a hike by June have fallen below 100% for the first time. In response, inflation expectations 10 yrs out have risen to 2.12%, up from 2% just one week ago and are at the highest level since Aug ’08. The BoE left rates unchanged as expected and raised the total size of their asset purchases by 25b pounds but that was less than expected and they did say they expected inflation to rise sharply above the 2% target in the near term in part due to higher energy prices and the pound is higher in response. Their inflation outlook in the medium term is more uncertain. The ECB also left rates unchanged after Euro region retail sales unexpectedly fell in Sept. CSCO #’s have the futures well above fair value ahead of Jobless Claims and Q3 Productivity data at 8:30am. Retail comps look mostly better than expected so far.