Financial markets tend to agree, with 10-year ‘breakeven’ inflation readings from inflation-protected Treasuries hovering just above 2.1% after hitting 3-1/2 year lows near 2% last week.
A regular fly in the ointment could be energy prices, with crude prices perking up to three-week highs just under $80 per barrel amid trepidation in the Middle East about possible Iranian retaliation.
But the move in crude is modest so far in context, with the year-on-year oil price still negative to the tune of more than 3%.
The upshot ahead of today’s bell is that Treasury yields, the dollar index and U.S. stock futures are all marginally higher.
Home Depot tops the earnings calendar, in a week that sees big retailers update alongside the July retail sales report.
Overseas, sterling rose as Britain’s unemployment rate unexpectedly fell in June. But the Bank of England will likely be encouraged by accompanying numbers that showed regular wage growth ebbing to its lowest in two years.
The euro was a touch lower too after Germany’s ZEW sentiment index for August fell much more than forecast – likely hampered by the market volatility last week.
In China, economic and credit worries persisted.
Chinese banks extended 260 billion yuan ($36.26 billion) in new yuan loans in July, down from the previous month and undershooting analysts’ forecasts – highlighting weak demand as a prolonged property downturn and job insecurity drag on business and consumer confidence.
