On Wednesday, British inflation data is in focus.
Economists polled by Reuters see the pace of annual price rises slowing, although it is cold comfort as they expect that to bring CPI down only as far as an eye-watering 9.8%.
On balance, the sheer size of the Bank of England’s task of reining in inflation has been supportive for sterling, which hit a 10-month high last week. Implied volatility in the options market suggests traders don’t expect sudden changes in the currency’s slow grind higher.
On the continent, final CPI figures are also due and a similar divergence in the rates outlook has the euro near one-year highs versus the dollar.
Elsewhere, earnings are in focus with electric vehicle maker Tesla (TSLA.O) reporting quarterly results and investors looking for guidance on how hard car price cuts have hit margins.
Morgan Stanley (MS.N) also reports, although investors seem to have already been satisfied that U.S. banking stress is not derailing the broader sector, and are back to Fed watching.
Bond markets see rates peaking soon. Six-month Treasury bills yield less than three-month bills , and the yield premium on both against the 10-year yield is its widest since the peak of the 1981 cycle.
The Fed’s “beige book” of economic conditions is published later on Wednesday and appearances are due from Chicago Fed President Austan Goolsbee and New York Fed President John Williams.
/cloudfront-us-east-2.images.arcpublishing.com/reuters/FEMGZZILN5NWXI24UKTBAI43R4.jpg "Sterling's inflation test 38")
