If yesterday was about Brazil election risks and China reaction to US tariffs, then today is also one about reactions just to different headlines. Economic news overnight was light and dark – Australian consumer confidence fell sharply due to mortgage hikes and politics, Korea unemployment jumps to 4.2% with KRW grazing near 1130, China M2 and loans are lower highlighting issues of easing needs to spark growth – with the PBOC adding liquidity for the first time in 3 weeks today. European and Italian July industrial production missed expectations and highlight the divergent growth paths in Europe vs. the US. On the positive side, hopes for a US/Canada trade deal rose and Brexit deal hopes remain buoyant – lifting GBP again. Also, two big storms move to hit the world – one to Hong Kong and the other to the US east coast – and energy prices bounce accordingly. In bonds, safe-havens are back in vogue except in Italy. Deputy PM Di Maio was quoted by Ansa saying that the government could face a ‘serious problem’ if it does not introduce a citizens’ income in the next budget this unwound with the usual denials and ongoing focus on ECB tomorrow. The reaction function of markets to headlines has been modest but the driver as the sense of what is news is more about policy reaction processes from central bankers and politicians. The ECB and BOE hang heavily over the market as the key question for investors is about whether they are able to follow the FOMC down the path to “normalization.” The risk of a global liquidity traps remain linked to doubts that the Fed can hike gradually without a recession or an inflation spike and that the ECB and BOE are in the same trap.  Inflation fears are more in the emerging market world than in developed ones and the reaction function of central bankers to EM pain seems to be the main focus since August. The bear market of shares in EM is notable and continues to dominate. Hong Kong moved into a bear market today. The MSCI Asia Pacific trades at 16-month lows and the MSCI EM at 14-month lows. Pain in EM remains notable with US divergence notable still.  The focus in macro and the sense of policy reactions being key shows up most in the GBP/USD rate today where 1.26 seems less likely than 1.35 again should the BOE sound positive like the Brexit talks.