Japanese consumers expect inflation (no surprise there)
- The global bond slouch paused yesterday as bond dealers were told to sit up straight and yields stopped rising. Of course, bond markets are still in thrall to the effects of captive investors, and it seems unlikely that bond yields will approach fair value any time soon – perhaps for a generation.
- Japan's consumers are feeling less positive (this is not necessarily shocking news). However nearly 90% of them expect prices to rise – but then Japanese consumers nearly always expect prices to rise. The deflation story in Japan was never about fears of falling prices, it was about fears of falling incomes.
- US industrial production is likely to be weakened as warmer weather moderates utility output (the data is for April). The oil sector is also likely to be affected – and as the data is nominal the unexpected weakening of energy prices in yesterday's producer price data may have an impact too.
- Michigan consumer sentiment from the US comes with all the normal caveats as to the reliability of sentiment data in the modern age. Nonetheless the labour market continues strong, and skilled wages are rising, which suggests the data should stay near the cyclical highs.