According to the Commerce Department’s report, there was a steep fall in US housing starts, which according to official statistics dropped 11% in July, while building permits tumbled 17.7%. Even though this was a very poor reading, the markets didn’t react to this data since it is a reversal from last month’s figures, which was boosted by a change in NYC construction code.

The set of bad data was followed by US July’s producer price index, which illustrated a higher than expected jump – of 1.2%, while core producer prices, which exclude food and energy, rose 0.7%. This was the strongest rise in core prices since November 2006, suggesting that the spread of cost pressures throughout the different sectors of the economy is gaining pace. This is certainly unpleasant news for US policymakers, who will need to keep on trying different manoeuvres in their inflation-fighting battle.

Crude oil prices traded at $113 a barrel yesterday; however, as oil prices start to fall back from their record high, the big question is whether and when this price drop will be passed onto retail inflation. Dallas Federal Reserve President, Richard Fischer, yesterday mentioned that “it is too early to tell if a stronger dollar and lower oil price will help curb US inflation.”

Data out today includes the BoE minutes at 09.30BST and August reading of the UK CBI industrial trends at 11.00BST. Having already received the Inflation Report the main information from the BoE minutes will be the voting pattern.

For the full story including today's Market updates, please download the full HSBC Economic Update.