Bonds stop collapsing (for now)
- Japanese 10-year government bonds now give a positive yield, and the US 10-year Treasury has stopped plummeting like a stone (the bond sell-off had exceeded the equity rally in size). The US market seems to be reassessing the risks of inflation in the US economy.
- US inflation will rise (it is already normal on most measures) – but Trump's boost to the construction industry will impact inflation with a delay. Congress has to legislate, and there are few "shovel ready" projects. US inflation is rising today on labor costs. The infrastructure inflation boost is a late 2017 story.
- The German economy slowed a little more than expected (but the difference is meaningless given the inaccuracy of this data). Trade is being blamed. The ZEW economic confidence index is due, offering all the accuracy and precision that an opinion poll can give.
- A leaked UK memo suggests that the government has yet to prepare a plan for EU exit. The extent of investor shock at this news is demonstrated by the complete lack of reaction. UK producer and consumer price inflation will be monitored for sterling weakness consequences. The Bank of England's resident Canadian testifies before Parliament.