Markets are giving contradictory signals

•     Markets are giving contradictory signals

–    Bond yields are rising, yield curves are steepening = recovery coming?

–    Yet equity markets are falling = recession?

•     Cause may be higher oil prices = fear of stagflation

–    Libyan production down, Saudi raises prices, API shows first drawdown in 8 weeks

–    Rising gasoline prices to raise inflation, sap consumer spending

•     China service sector PMI rises

•     New Zealand data disappoints = weak NZD

–    Milk prices fall, unemployment rises

–    Australia retail sales up but not by as much as expected

–    AUD/NZD rises further

•     Today:

–    Eurozone: Final service-sector PMIs; ECB weekly meeting to discuss Greek ELA

–    UK:  Service-sector PMI

–    US: ADP report expected to show jobs back over 200k = USD-bullish

–    Canada:  Ivey PMI