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Economics returns

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  • Economics returns to markets today, at least partially pushing politics into its proper (subordinate) place. Euro area flash estimates of consumer price inflation are due, and the figures may well show negative inflation rates in yoy terms.
  • The Euro data, if negative, will allow shrill, sensationalist headlines about "deflation". It is not deflation, so much as a relative price shift, but given that the ECB's Draghi has decided he wants sovereign bond purchases and will seize on anything to bolster that case, deflation scare stories will be promoted.
  • The Bank of England starts a two day meeting with a more economically justifiable approach. The relative oil price shift has been cited as a demand-inflation rather than a general price deflation force by the Bank.
  • Minutes from the last US FOMC meeting are due, and with more dissent and more complex policy making decisions, these are going to be important. We also have trade data, and the role of non-oil imports into the US will matter a great deal as the US remains the key driver of global growth.

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