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  • The US Housing sector continues to relay a mixed picture. Housing Starts were slightly lower than expected, New Home sales better than expected and the Case-Shiller showed residential price appreciation of 3.58% y/y. The falls in the Mortgage 30 year fixed rate (a benchmark for the US residential market) in recent weeks should provide a stimulus to this part of the economy.
  • Unsurprisingly, there was no clear majority for the Brexit options proposed by the House of Commons (although a new referendum vote and the Customs Union choices were relatively close). A new set of indicative votes are to be held Monday. However, if the House of Commons struggles to move to a favoured preference we expect a request from the UK government for a longer extension much to the chagrin of the ERG. Although, developments in London remain very fluid and most options are possible including another general election.
  • Mario Draghi notably acknowledged the adverse connotations associated with the ECB negative deposit rate however, he continues to believe that the benefits of their monetary policy actions via the deposit rate overwhelmingly outweighed the negatives.
  • Inflation pressures remain subdued in the US as reflected by the Federal Reserves favored measure (Personal Consumer Expenditure – see chart). Will the Fed’s fear of deflation ultimately cause the creation of asset bubbles? Arguably, this has already manifested itself in parts of the bond market. In the past extended periods of low interest rates had created distortions in financial markets – we remain cognizant of the possible replication of such a development.