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Five things you need to know on Friday

All eyes are on US inflation data, banks kick off earnings season, and the UK capitulates over its Brexit bill. 

Here are some of the things people in markets are talking about today.

CPI looms

US consumer price data, released 8:30am Eastern Time, take center stage as investors weigh whether the Federal Reserve has the resolve to keep tightening as the US economy nears full employment. After three months of decelerating price gains, economists polled by Bloomberg reckon consumer prices will rise 0.1% month-on-month in June, and by 0.2% excluding food and energy prices. Fed chair Janet Yellen’s testimony before Congress this week was interpreted as dovish, even as she argued it was premature to conclude that the underlying inflation trend is falling short of the central bank’s 2% target. Retail sales and industrial production data for June are also due this morning, as well as the preliminary University of Michigan consumer sentiment survey for July.

Banks report

Financials have reclaimed the title as the best-performing sector in the S&P 500 since the US election, buoyed by a rise in global bond yields over the past two weeks. Today, investors will get a sense of whether that optimism is vindicated, as JPMorgan Chase & Co, Wells Fargo & Co, Citigroup, and PNC Financial Services Group kick off earning season, with loan growth and credit quality particularly in focus. Investors are hoping the Trump administration’s efforts to cut regulation and taxes will endow the sector with a new lease on life, as the president gears up for a legislative battle over health-care reform next week. 

Divorce bill

The UK acknowledged for the first time on paper that it is obliged to pay the European Union as it exits the trading bloc, signaling an attempt to advance slow-moving Brexit negotiations. With the bill estimated as high as 100 billion euros ($114 billion), the divorce settlement has emerged as a key stumbling block. It’s one of the three areas — alongside citizens’ rights and the border with Ireland — that the EU has said requires “sufficient progress” before discussions can begin on Britain’s future relationship with the EU.

Markets mixed

Treasuries headed for their first weekly gain in three tries, while bunds rose for the first day in four. Yields on the US 10-year note fell one basis point to 2.34%, while US stock futures and the Stoxx Europe 600 were little changed. A barrel of West Texas Intermediate crude for August delivery was trading at $46.36 a barrel at 5:50am in New York.

Steely resolve

President Donald Trump has vowed action to crack down on foreign countries such as China that are “dumping steel” onto the US market, while adding that he’s considering imposing new tariffs or quotas on imports. The comments, made to reporters en route to France this week and released on Thursday, sent shares in US Steel Corporation higher, with Commerce Secretary Wilbur Ross racing to complete an investigation into the issue. 

© 2017 Bloomberg

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