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Inflation - not a one-way bet

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Modest sanctions against North Korea were agreed - not enough to change current tensions, and not enough to upset Russia or China. The UK government succeeded in turning the clock back to the 1530s by passing EU exit legislation - the outcome markets expected.
  • Swedish consumer price inflation is due. At a time when inflation data is more distorted by statistical weirdness, it is worth noting that the statistical weirdness in Sweden has been raising rather than reducing inflation. This reminds investors that inflation bias is not a one-way bet.
  • UK consumer, retail and producer price inflation numbers are due. UK inflation has been showing some of the effects of a weaker currency. However, the Bank of England's research suggests that the full effects are unlikely to be felt by consumers, and inflation increases will be muted.
  • Some investors are nervous about US Federal Reserve independence (potentially five out of seven governors are to be appointed). The Fed revealed that Ivanka Trump and Fed Chair Yellen met for a one-hour breakfast meeting. Investors would react if the meeting was about Yellen remaining Chair. Investors would react differently if the meeting was about Trump considering whether to apply to be Chair.