US President Trump is to send the administration's top economic officials to China next week, to negotiate on trade. In case it was not clear, the US administration's top economic officials are Treasury Secretary Mnuchin and Trade Representative Lighthizer. Meanwhile, positive comments were offered about a deal over NAFTA.

US rhetoric over trade is still very similar to the trade policies of Tudor England. Trade surplus good. Trade deficit bad. US President Trump was warning that there may be more substantial taxes on US consumers (the president said "tariffs," but that means "taxes" on US consumers).

Geopolitics are having some impact on financial markets. The muddled approach to North Korea is not a focus. The Iranian nuclear deal is a focus, because it impacts oil prices. Rising oil prices and rising inflation expectations were used to justify 10-year US Treasury yields breaching 3%. Remarkably, civilization has not collapsed with 3% yields.

European inflation expectations are less affected by oil price moves than they are US inflation expectations. Europe is more efficient in oil consumption, and the tax structures make oil increases less visible. Nonetheless, inflation is moving higher in Europe. We have a trio of ECB speakers scheduled today.