Watch out for the Fed backtracking

- "US jobless claims data were weak, but incoming data suggest a double dip is still unlikely. The US economic slowdown is certainly not due to malfunctioning credit markets. Mortgage yields are at all-time lows, and corporate debt yields are also very low."
- "We believe the data need to turn significantly worse than what we and the consensus expect for the Fed to decide to step up QE; if and when it does, it will need to be overwhelming, probably accompanied by an inflation target."
- "Beyond the US, disinflationary forces appear to be over globally, particularly as there is upward pressure on food prices."
- "In China, we expect authorities to remain on hold to balance risks, but even if they ease policy, we expect them to keep measures aimed at lowering housing prices."

Barclays Global Economics Weekly 20100820

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