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Inflation, China, and politics

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The‎ markets are held in thrall by tomorrow's US Fed meeting. It is not the rate decision so much as the nuances around it that excite investors. Worrying about the Fed gives a reassuring (perhaps false) sense of being normal in an era of abnormalities.
  • ‎Independent central banks do need to remain focused on inflation. Shorn of the illusion created by lower oil prices, the long-evident if divergent underlying inflation forces are showing through. We have final consumer price inflation from the UK and several Euro economies today.
  • Chinese retail sales were strong, with industrial production in line with expectations. China's determination to meet its growth goals should occasion no surprise, but this is relatively inward looking growth‎ with very limited translation to growth drivers elsewhere in the world.
  • Politics is not going away as a market focus. Some US Senate Republicans are breaking with Trump over investigations into Russian involvement in the elections. This might have a bearing on cabinet confirmation hearings. China's ire over questioning the 'One China' policy continues. Oil prices continue to rise.