Data, dubiousness and distortions
- Greece's Prime Minister declared on television that negotiations about the Greco-German crisis are in their final stages. If it is on television, it must be true – except that those ever present "unnamed officials" of the EU are less optimistic about a deal being done.
- The San Francisco Fed has entered the debate about what is actually happening in the US, seasonally adjusting the seasonal adjustment process to suggest that the US economy grew far stronger in the first quarter than the official data suggested. Which raises questions about policy being distorted.
- Inflation is the main story in the European time zone. The UK is expected to show the disinflation forces of lower oil and supermarket competition combining, to give a headline CPI that the consensus expects to be about 0% yoy. The Bank of England will, very sensibly, regard these forces as temporary.
- Euro area inflation is expected to come in at 0%. This is not the end of deflation because there never was deflation (negative CPI does not mean deflation). As the oil price decline fades from the calculation, Euro area prices will continue to increase.