US: Focus on inflation numbers – BBH

The North American session features US PPI, which is not a market-sensitive report, but economists will look for clues into tomorrow's CPI report, according to analysts at BBH.  

Key Quotes

“Lower gasoline prices may weigh on the headline CPI, but the core is expected to be unchanged at 1.7%, where it has been since May.”

“Our calculations put fair value for the December Fed funds contract, assuming a 25 bp rate hike next month, at 1.295%.  That is where the contract settled yesterday.  However, fiscal policy, i.e., tax reform is overshadowing monetary policy at the moment.  The House seems to be moving toward a vote later this week, even though there may still be some last-minute adjustments.  President Trump is expected to address the House Republicans before the vote.  Judging from the tweet storm, POTUS wants the bill to include a repeal of the individual mandate for the Affordable Care Act and wants to cut the top tax rate.”

“Separately, we note that a bipartisan group of Senators appear to have agreed to the number of US financial institutions regarded as systemically important from 40 to around 12.  The regulatory obligations of banks with less than $250 bln in assets will be reduced.  The Senate bill is co-sponsored by nine Democrats, suggesting the bill will likely secure the necessary 60 votes.”