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A deflation fan dance?

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  • German business confidence is due, courtesy of the ifo, and in the wake of some stronger than expected sentiment data across the Euro area yesterday. This will hopefully help dispel some of the deflation concerns in markets.
  • Meanwhile ECB president Draghi is speaking, and will need to continue to dance the deflation fan dance - teasing that the ECB is able and willing to deploy anti-deflation policies, without signalling any necessity of doing so.
  • The reserve Bank of New Zealand (unconcerned about deflation risks) raised rates a quarter point, as expected, to take the OCR back to its pre 2011- eathquake levels. The accompanying statement was somewhat hawkish in tone.
  • US data is likely to be subordinate to corporate earnings, as macro today's calendar is durable goods and initial claims. Tensions in Eastern Ukraine seem to have escalated and may attract market attention - investors will focus on the risk of broader sanctions.

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