United States

Having seen what monetary-policy failure looks like in Japan.. and in the US, we now turn our attention to the world. Amid NIRP temptations, growth fears, and faltering faith in central banker control, market-implied inflation expectations have collapsed to record lows. Worse still, even The Fed's own survey of consumer's inflation expectations has slumped to record lows.

Inflation expectations are collapsing... (US and Europe at record lows - worse than the lows in the middle of the last crisis)...

Tomorrow, John Kerry will meet Sergei Lavrov and several of his other counterparts from Europe and the Mid-East in Munich in a last ditch effort to revive Syrian peace talks, which fell apart amid an intense Russian air assault on rebel positions in Aleppo.

For the first time since 2007, the spread between 2Y and 10Y US treasury yields has to 100bps. While not inverted, which the status quo maintains means there cannot be a recession, the bond market is flashing ominous signs for both the economy and the US financial system...

The curve has collapsed since The Fed hiked rates...

And financials have begun to catch down to that reality...

Charts: Bloomberg

The widow of a former Islamic State/ISIS leader killed in a US raid has been accused of providing material support to a foreign organisation which resulted in the death of the American aid worker Kayla Mueller. Nisreen Assad Ibrahim Bahar -Umm Sayyaf – is charged by a US federal court with holding American Kayla Mueller as a sex slave for ISIS leader Abu Bakr al-Baghdadi and contributing to her death.

For a Yellen testimony which explicitly focused on "financial conditions" which have become "less supportive of growth" as one of the chief risks facing the Fed's rate hike philosophy, we were surprised to find that the list of troubling developments "related to financial stability" as laid out in the Fed's Monetary Policy Report to Congress which accompanies the chairwoman's testimony, was relatively sparse.