United States

'Reflation'-themed fund-flows are fading fast (with equities, cyclicals outflows accelerating), and 'higher rate beneficiaries'-linked bond flows (bank loans, HY, inflation protected) slowing to multi-month lows. As RBC's head of cross-asset strategy, Charlie McElligott notes, their model shows the ETF inflow story is no longer a price-driver of short term stock market pricing... "it's a new regime."

McElligott notes the following three key themes remain:

The Fed's most recurring lament over the past 8 years, ever since the Financial crisis, is that there has been no measurable inflation in the US economy when using such conventional indicators as CPI, even though according to recent measurements by PriceStats real inflation, not the BLS' seasonally-adjusted, goalseeked and politically convenient  mutant, is now running at a blistering 3.6%, the highest in five years.

Back in the summer of 2015, Deutsche Bank mistakenly paid $6 billion to a hedge fund client by mistake in a “fat finger” trade on its foreign exchange desk. The embarrassed bank recovered the money from the US hedge fund the next day, and quickly accused junior member of the bank’s forex sales team of being responsible for the transfer in June while his boss was on holiday. AS the FT then reported, instead of processing a net value, the person processed a gross figure. That meant the trade had “too many zeroes”, said one of the people.

It's official: moments ago TransCanada said the U.S. Department of State issued a presidential permit for the construction of the Keystone XL Pipeline, ending a multi-year controversial, at times acrimonious debate over the future of the pipeline. The pipeline linking Canadian oil sands to U.S. refiners had been blocked by Barack Obama, who said the pipeline would do nothing to reduce fuel prices for U.S. motorists and would contribute emissions linked to global warming.

Asian shares and S&P futures rose on optimism that today's rescheduled U.S. vote on health care will pass following Trump's Ultimatum to the Freedom Caucus. European stocks gave up some of Thursday’s gains, falling for the fourth time in five days, and moving further away from a 15-month high reached a week ago while the yen weakened for the first time in nine days before the long awaited U.S. health-care vote that has dominated market sentiment this week. Oil was headed for a third weekly drop this month. Economic data include durable goods orders, Markit U.S. manufacturing PMI.