Hints of hosiery

Daily update

At congressional confirmation hearings, Federal Reserve Chair Warsh famously denied being US President Trump’s sock puppet. Markets will scour Warsh’s comments today for any hint of hosiery. The desire to prove political independence may give a hawkish tone. Warsh already signaled a disinclination to offer policy guidance (despite the risk this causes market volatility, raising the cost of capital and weakening growth).
Warsh speaks at the ECB’s central banker summer camp. Lane and Lagarde of the ECB both also speak—it is too much to hope either will apologize for the recent policy error, but they might promise not to sin again. Recent regional Eurozone inflation numbers have consistently slowed below expectations—Euro aggregate data will likely do the same today.
Japan’s Tankan business sentiment poll was stronger than expected across almost every category, including capital spending plans. The Tankan retains some of the credibility other sentiment polls have lost. While the Bank of Japan is unlikely to react to a single poll, the general data direction is consistent with a future rate increase.
Oil prices remain indifferent to the claims and counter-claims about US talks in Doha (with Qatari officials, not Iranian officials). Markets still assume the US domestic political position will force a deal eventually.