Morning comment, 17/5/2017 UBS

• At what point does US political noise cease to be partisan posturing, and start becoming a reason to dust off the US constitution (or at least the DVD box set of "The West Wing")? The dollar has weakened on the latest news reports of political problems.
• The question for markets is "can the current administration get anything done?" if this climate persists. The importance of international investors in US markets hints at overshooting – international investors tend to understand politics less well than domestic investors. This is why market political risk was always higher in the US than in Europe.
• Euro area consumer price inflation is due; the headline is expected to rise after temporary March weakness. The big adjustment of inflation (back to normal levels) has happened. What we have now is noise around the trend. Oil moves still matter in this regard, to headline and core price measures.
• Former US Fed Chair Bernanke is speaking – as the architect of quantitative policy, comments on a possible move to passive quantitative policy tightening in the US will be of interest. UK labor market data is due; wages are probably the more relevant indicator, in the wake of higher UK inflation.