U.S. labor market has been improved since 2010 and its pace is vey solid until now. But, we had not expected Fed's fund rate hike with low nominal indicators including CPI and other earnings or sales data. Unless the price is key factor, the wage, nominal indicator, would be under the pressure to upside. If then, normalization of monetary policy from extremely outlied current conditions.
(Mean while there are other main factors in subdued wage growth. One is labor market slack and anothe one is low productivity, although Richard Fisher said he couldn't believe productivity index reflected real condition. But, these two conditions show somewhat improvement recently.)
Indeed, I think the nominal is the key factor, because this only should decide whether current economic condition is deflation or not - disinflation or reflation.
And there was tragedic terror in Paris last night and it seems done by IS.
Is this like 9.11 terror in U.S. on economic side? Unlikely yet.
This terrible event seems to lead fast action against IS meaning conflicts in mid-East rather than real economic activities contraction in major countries. The issue with Russia only seemed very weak to cause volatility of oil price.
While oil price tried to break 40 dollar per a barrel last night, this tragedy could underpin the price with even upside potential. And rather, with this, the real economy could be pushed higher...I expect. Of course, there will be risk-aversion movement in short-term lowering major government bond yields...
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