Markets like Italian uncertainty?
- Italy has been plunged into political uncertainty. It must be Monday. The Italian president refused to approve the proposed finance minister. The proposed "anti-party" coalition government has been withdrawn. A technocrat government then early elections seems the most likely outcome. Markets may take this as good news (less fiscal expansion). Italian investors have had a certain amount of practice at dealing with uncertainty.
- The oil price has weakened on reports that OPEC might increase output to substitute for lost Venezuelan and possibly lost Iranian supply. A ten dollar change in the oil price changes the value of oil exports roughly USD 160bn to USD 170bn per year. A lower oil price means people demand fewer dollars with which to buy oil.
- The North Korean – US summit seems to be back on (the Trump Twitter Feed implies as much). Markets still do not care.
- The data calendar today is quiet. There is an inflation theme later this week with consumer prices due from various parts of the Euro Empire. The US offers the monthly PCE deflator. The US will also revise first quarter GDP – but the big revisions to US GDP tend to take place more than a year after the initial release.