China Returns And Flash PMI Featured After U.S. Rate Adjustment Extended

China returns from its long holiday – estimates of strong domestic travel fanned optimism of a recovery in consumption. The US January CPI and PPI came in stronger than expected and this extended the recovery in US interest rates. In turn that helped underpin the dollar. We do not think the data itself changes the Fed’s stance. At least seven Fed officials speak in the coming days to test this hypothesis. There are still several key reports before the data dependent FOMC meets again in about four weeks. Owing to the different weights and methodology, the PCE deflator, which the Fed targets, is likely to be better behaved. Still, the two-year Treasury yield (US2Y) popped above 4.70% at the end…