Inflation! Even with oil!! Exciting!!!
- High yield credit markets have moved as one might expect – with commodity and the lowest grade bond issuers suffering. There does not appear to be systemic risk from this, so it seems unlikely that there will be a constraint on policy.
- Inflation numbers are due from Spain, in the wake of a modest upward revision from Italy yesterday. The UK also has inflation, though this is being kept in check for largely local reasons (supermarket price war base effects), and should not be extrapolated.
- US core consumer price inflation is likely to be supported by local forces as well, with housing costs adding – the US calculation of housing costs is pretty much unique. Crude oil prices will be mitigated by the rising labour element of gasoline prices (circa 35% of the price).
- Sentiment data is due in the form of the German ZEW economic survey and the US Empire State manufacturing survey. Sentiment is supposed to be real data, but it ends up being biased towards the nominal. This may matter given currency moves.