The power to surprise (on pricing)
- Inflation data is due from the US in the form of consumer price inflation. This is not the measure favored by the US Federal Reserve, but it is the measure that seems to be favored by financial markets. The higher oil price will be reflected in both the headline and the core measures.
- There has been a tendency for inflation numbers to surprise positively (Japanese producer prices were higher than expected overnight). This cannot all be blamed on the oil price. It is not too difficult to calculate the impact of the oil price on inflation so surprises should be limited. Possibly firms find the oil price a convenient excuse to hide behind when raising other prices.
- Economic sentiment opinion polls are due: the German ZEW survey and the US small business NFIB survey. As sentiment surveys these measures should be treated with all the respect that the evidence of their past levels of accuracy can command.
- North Korean President Kim met with US President Trump. The US president seems to have a better relationship with the North Korean leader than with the Canadian leader. Markets don't care too much about North Korea. Markets do care about US relations with Canada.