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All is for the best...

  • Equity markets are embracing the belief that all is for the best in this best of all possible worlds (US indices hitting new highs). Economists would point out that rising equity markets are not "good" (or "bad"). Markets that accurately reflect economic fundamentals are "good", whether prices rise or fall to achieve that.
  • China saw strong lending growth again, suggesting that the authorities' measures to curb credit are having little impact and credit will provide a further impulse to Q2 growth. Japan's broad money supply shows how much the Bank of Japan has to overcome if it is ever to get positive inflation.
  • The US Federal Reserve minutes surprised as to the timing of their release but not as to their content. There is disagreement over when bond purchases should be scaled back, but the policy change is clearly being considered.
  • Australian labour market data weakened, with unemployment rising - not a surprise given the strength of last month's data, but coming after a few other softer economic numbers. Various Euro area economies offer up consumer price data today.

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