Inflation surprise (upside) Core inflation is steady, so the upside-surprise channel is quiet. It would fire on a core reading ≥0.2pp above the prior — watch it because that is what forces a central bank to stay restrictive and pressures the longest-duration assets first.
Inflation surprise (downside / disinflation) Core inflation isn't cooling fast enough to trigger the disinflation channel. A fall of ≥0.2pp would fire it — worth watching because it is the cleanest tailwind for long-duration growth and government bonds.
Monetary easing (rate cut) The policy rate is on hold, so the easing channel is dormant. A cut would fire it — it matters because the first cut of a cycle typically broadens a rally and pressures the currency.

China

No active mechanism this week — the standing read above carries the bloc.

What would change the read

Monetary easing (rate cut) The policy rate is on hold, so the easing channel is dormant. A cut would fire it — it matters because the first cut of a cycle typically broadens a rally and pressures the currency.
Monetary tightening (rate hike) The policy rate is steady, so the tightening channel is dormant. A hike would fire it — watch it because it hits long-duration growth, long bonds, and gold first.
Growth acceleration (expansionary PMI) Manufacturing isn't both expanding and accelerating, so the growth-acceleration channel is dormant. A rising PMI back above 50 would fire it — it matters because it's the signal to rotate from defensives toward cyclicals.

Euro area

No active mechanism this week — the standing read above carries the bloc.

What would change the read

Monetary easing (rate cut) The policy rate is on hold, so the easing channel is dormant. A cut would fire it — it matters because the first cut of a cycle typically broadens a rally and pressures the currency.
Monetary tightening (rate hike) The policy rate is steady, so the tightening channel is dormant. A hike would fire it — watch it because it hits long-duration growth, long bonds, and gold first.
Growth acceleration (expansionary PMI) Manufacturing isn't both expanding and accelerating, so the growth-acceleration channel is dormant. A rising PMI back above 50 would fire it — it matters because it's the signal to rotate from defensives toward cyclicals.

Japan

No active mechanism this week — the standing read above carries the bloc.

What would change the read

Inflation surprise (upside) Core inflation is steady, so the upside-surprise channel is quiet. It would fire on a core reading ≥0.2pp above the prior — watch it because that is what forces a central bank to stay restrictive and pressures the longest-duration assets first.
Inflation surprise (downside / disinflation) Core inflation isn't cooling fast enough to trigger the disinflation channel. A fall of ≥0.2pp would fire it — worth watching because it is the cleanest tailwind for long-duration growth and government bonds.
Monetary easing (rate cut) The policy rate is on hold, so the easing channel is dormant. A cut would fire it — it matters because the first cut of a cycle typically broadens a rally and pressures the currency.

The dataL3

United States

Indicator	Current	Prior	Δ	As of
CPI (YoY)	2.33	2.90	-0.57 ▼	2018-09-01
Core CPI	0.18	0.20	-0.02 ▬	2018-09-01
Core PCE	1.96	2.00	-0.04 ▬	2018-09-01
Policy rate	2.00	2.00	+0.00 ▬	2018-09-02
GDP	4.20	4.10	+0.10 ▬	2018-08-29
PMI (mfg)	58.40	60.00	-1.60 ▼	2018-08-01
PMI (svc)	55.70	59.10	-3.40 ▼	2018-08-03
Unemployment	3.70	3.90	-0.20 ▼	2018-09-01
10Y yield	2.86	2.86	+0.00 ▬	2018-08-31
2Y yield	2.62	2.64	-0.02 ▬	2018-08-31
2s10s slope	0.24	0.22	+0.02 ▬	2018-08-31
FX vs USD	95.14	94.72	+0.42 ▬	2018-08-31

China

Indicator	Current	Prior	Δ	As of
CPI (YoY)	2.10	1.90	+0.20 ▲	2018-08-09
Policy rate	4.31	4.31	+0.00 ▬	2018-08-31
GDP	6.70	6.80	-0.10 ▬	2018-07-16
PMI (mfg)	50.80	51.30	-0.50 ▼	2018-09-01
PMI (svc)	54.20	54.00	+0.20 ▬	2018-08-31
Unemployment	4.90	5.00	-0.10 ▬	2018-09-01
10Y yield	3.58	3.58	-0.01 ▬	2018-08-31
2Y yield	3.07	3.08	-0.01 ▬	2018-08-31
2s10s slope	0.50	0.50	+0.00 ▬	2018-08-31
FX vs USD	6.84	6.82	+0.02 ▬	2018-08-31

Euro area

Indicator	Current	Prior	Δ	As of
CPI (YoY)	2.00	2.10	-0.10 ▼	2018-08-31
Policy rate	0.00	0.00	+0.00 ▬	2018-07-26
GDP	-0.30	0.10	-0.40 ▼	2018-08-17
PMI (mfg)	54.60	55.10	-0.50 ▼	2018-08-23
PMI (svc)	54.40	54.20	+0.20 ▬	2018-08-23
Unemployment	8.20	8.30	-0.10 ▼	2018-08-31
10Y yield	1.32	1.37	-0.05 ▬	2018-09-01
FX vs USD	1.17	1.17	-0.00 ▬	2018-08-31

Japan

Indicator	Current	Prior	Δ	As of
CPI (YoY)	0.90	0.70	+0.20 ▲	2018-08-24
Core CPI	0.00	0.00	+0.00 ▬	2018-08-24
Policy rate	-0.10	-0.10	+0.00 ▬	2018-07-31
GDP	n/a
PMI (mfg)	n/a
Unemployment	2.50	2.40	+0.10 ▲	2018-08-31
10Y yield	0.12	0.11	+0.01 ▬	2018-09-01
FX vs USD	111.00	111.71	-0.71 ▼	2018-08-31

Concept libraryL3

Terms marked ✓ are linked inline above — click any dotted term in the text to expand it in place.

2s10s: The gap between the 10-year and 2-year government bond yields. Positive = normal upward-sloping curve; negative ('inverted') = a classic late-cycle/recession warning.
PMI: Purchasing Managers' Index. Above 50 = the sector is expanding vs last month; below 50 = contracting. A timely read on activity.
carry trade: Borrowing in a low-rate currency (long the yen's case) to buy higher-yielding assets elsewhere. It unwinds violently when the funding rate rises or the funding currency strengthens.
credit impulse: The change in the flow of new credit into an economy. A rising impulse front-runs stronger demand for commodities and cyclical goods, with a lag.
cyclicals: Sectors whose earnings rise and fall with the economic cycle — industrials, materials, energy, consumer discretionary.
defensives: Sectors whose demand is steady through the cycle — consumer staples, utilities, healthcare. They outperform when growth slows.
discount rate: The rate used to convert a future cash flow into today's value. A higher discount rate makes far-off cash flows worth less now.
disinflation: Inflation that is still positive but falling (prices rising more slowly) — distinct from deflation, where prices actually fall.
duration: How sensitive an asset's price is to interest rates. 'Long-duration' assets (long bonds, fast-growing stocks whose profits are years away) move most when rates change.
net interest margin: The spread a bank earns between what it charges on loans and pays on deposits. Higher short rates / steeper curves tend to widen it.
nominal yield: The headline interest rate on a bond, before subtracting inflation.
policy rate: The interest rate a central bank sets directly (e.g. the Fed funds rate, the ECB deposit rate, China's LPR). It anchors all other rates.
rate path: The market's expectation of where the policy rate goes over the next year or two — not just today's level, but the whole expected trajectory.
real yield: The yield after subtracting expected inflation — what a lender actually earns in purchasing power. Real yield ≈ nominal yield − expected inflation.
term premium: The extra yield investors demand to hold a long bond instead of rolling short ones — compensation for tying money up and for issuance/inflation risk.