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Inflation and deflation in one day

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  • Japan saw consumer sentiment hit a low for the year �€“ the weaker yen has raised utility bills which the Japanese consumer is not that happy about. M3 money supply figures showed a surge in corporate holding of cash on balance sheet.
  • The UK's RICS house price survey hit an eleven year high, with the government's help to buy scheme being cited as a cause. There is anecdotal evidence that help to buy has encouraged foreign investors to invest in UK housing in anticipation of being able to flip property as the scheme takes hold.
  • The Euro area has some regional inflation figures, with the possibility of deflation being shown in Portugal. In the wake of weak Euro area figures (and the ECB's rate cut response) that may fuel investor concerns of more general deflation threats.
  • US markets are relatively calm, although 10 year yields are still moving as expectations about Fed policy timing shift. We hear from Bernanke tomorrow, and have Yellen's confirmation hearings on Thursday, so these events may confine more extreme moves for now.

Listen to the audio version of this briefing.