A trend toward higher government bond yields that had been in vogue for much of August has reversed in recent days. This can be traced to a batch of weaker-than-expected economic data and suggestions that the US labour market, in particular, is re-balancing (chart 1). Notwithstanding some softening in the US, more of the dataflow from the euro area has been firmer-than-expected in recent weeks (see chart 2). Until recently those trends, however, have failed to impress FX investors (chart 3). One reason for this arguably concerns interest rate expectations and growing evidence, in particular, from the euro area to suggest that the ECB monetary policy is now very restrictive (chart 4). Still, with this week’s European inflation data offering little comfort for those with a dovish disposition (chart 5) a pivot toward easier monetary policy from the ECB is unlikely in the period immediately ahead. Finally, how China evolves from here will remain key for the global economic outlook which is why the messages from most of its high frequency data are equally unhelpful for those with a more bullish disposition towards its economy (chart 6).