Another rethink

Uncertainty

Financial markets' mastery of putting carts before horses is almost unequalled in any other field of human endeavour. Witness sterling's plunge in the aftermath of the EU referendum and the way bonds have fallen in the expectation of Trumponomics driving US interest rates ever higher. But they're all guessing.

To describe Mr Trump's economic strategies as sketchy is to credit them with an exaggerated precision and depth. On this side of the Atlantic an internal memo from business consultancy Deloitte, which circulated yesterday, said Downing Street has "no common strategy" for Britain's exit from the EU. The US president-elect and the British prime minister seem still to be in the dark - or at least in some doubt - about policy. Yet investors charge hither and yon in the hope that their next guess will be the correct one.

Yesterday they had second thoughts about long-term interest rates and the raw materials needed for construction. US bonds staged a modest rebound and iron ore prices fell. The change of heart came after an American fund manager reminded his customers that Donald Trump "does not have a magic wand" to reignite the economy: Federal programmes take time to implement.

Sterling in the doldrums

For a second day the pound trod water, rather more successfully than it had on Monday when its head was mostly below water. It was just about unchanged against the euro and the US, Australian and New Zealand dollars. 

An early selloff for sterling - perhaps caused by that Deloitte memo - came to a halt after the UK inflation data showed consumer price index inflation slowing to 0.9%. It had been expected to rise to 1.1%. The lack of reaction is attributable to the Bank of England's pledge to decouple interest rates from inflation for the time being. Nor did the pound react to governor Mark Carney's comments to the Treasury Committee. He stuck to his policy guns, saying that to blame the bank for economic equality is a "massive blame-deflection exercise".

Strong US retail sales data for October were accompanied by upward revisions to September's numbers. Market pricing now makes a Federal Reserve rate increase next month look all but a certainty.

UK jobs

Another fun-packed day of economic statistics lies ahead. None of them is of huge importance but the UK employment figures could matter to sterling. 

Australian data already released show wages rising by an annual 1.9% and vehicle sales up by 1.2%. Britain's jobs numbers are expected to continue the trend of rising employment and higher wages: A small rise in the number of jobseekers should be overshadowed by a 90k increase in the number of people in work and a 2.4% rise in wages. South African retail sales come out before lunch and US industrial and manufacturing production this afternoon. 

Tonight come NZ retail sales and producer prices and Australia's employment figures. The former could be delayed by IT problems and the later can be erratic.