The 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 stronger suggestions, in particular, that the US labour market is re-balancing. In our charts this week we offer some colour on:

·       The re-balancing of the US labour market

·       Data surprises in the US versus the euro area

·       The dollar and real interest rate differentials

·       Supply and demand pressures in the euro area

·       Still-sticky euro area inflation

·       The messages from China’s high frequency indicators