Stock markets around the world ‎have been trying to bounce back from Monday's big selloff. The rebounds have been moderate so far, clawing back up to half of recent losses. Most importantly, the NASDAQ which led the decline has not rebounded more than other US indices. Because of this it appears that this pause may be due more to bears taking a break than renewed bullishness. 

This morning finds US indices up 0.2%. The Dax is up 0.5% on positive German ZEW investor survey results. The FTSE is flat, held back by rising UK inflation.

In currency markets, CAD has been the big mover overnight, continuing the rally which started yesterday afternoon. Bank of Canada Deputy Governor Carolyn Wilkins ignited the rally at a lunchtime speech Monday where she indicated‎ that with the drag of lower oil prices on the economy fading, the back is assessing cutting back on stimulus. Recall, the Bank of Canada had cut interest rates from 1.00% to 0.50% back in 2015 to try and offset the impact of the oil price collapse. I suspect that the Bank may also be thinking about reloading in case NAFTA renegotiations starting in August or other potential trade flareups with the US impact the Canadian economy.

Sterling is also having a good day, bouncing back against USD, EUR and JPY. The bounce may be due to a combination of post-election selling fading and UK inflation increasing faster than expected. Rising inflation and a strong UK economy could increase calls for the MPC to consider cutting back on stimulus as well. 

US producer prices are due this morning, but the main focus is likely to remain on tomorrow's Fed interest rate decision. Another increase is expected this week, but where the FOMC goes from here is more of an open question. Attorney General Sessions testifies to the Senate on Russia and Comey today which could set off fireworks in the media but may not have an impact on the markets unless there’s a big surprise of some kind. 

Corporate News

There have been no major corporate developments this morning. 

Economic News

Significant announcements released overnight include:

UK consumer prices        2.9% vs street 2.7%
UK core CPI            2.6% vs street 2.4%
UK retail prices            3.7% vs street 3.5%
UK producer input prices    11.6% vs street 13.5%
UK producer output prices    3.6% as expected
UK house prices        5.6% vs street 3.6%

Germany ZEW current        88.0 vs street 85.0
Germany ZEW expectations    37.7 vs previous 35.1

Upcoming significant economic announcements include:

8:30 am EDT        US producer prices        street 2.3%
8:30 am EDT        US core PPI            street 1.9%

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