>Bank of Japan (BOJ) Governor Kuroda declared that the Bank of Japan was now willing to purchase unlimited amounts of Japanese government bonds in order to enhance their value.

The market had been assuming that the value of Japanese government bonds was declining and the 10-year yield had moved to the death-defying heights of 0.035 percent (lower prices mean higher yields).

Clearly, the Bank of Japan could not tolerate that and so they moved to enhance the value of the market by offering to buy 2-year and 5-year bonds at negative yields. Interestingly, no one sold.

There is a word in the English language for fictitiously enhancing market values …

Does this matter in the real world? Are the Japanese consumers going to cast aside their gloom about expectations of falling wages and expectations of sharply rising prices?

Japanese consumers have the highest inflation expectations in the developed world.

Maybe the news that no one sold the Bank of Japan’s 5-year bonds at minus 0.04 percent will transform expectations about the Japanese economy. Somehow, at least to me, this seems unlikely.

Central banks remain in focus today with the prospect of Fed Chair Yellen testifying to the Joint Economic Committee (JEC) of Congress. It is probably too soon to describe Yellen as the outgoing Fed Chair.

During the campaign, Trump had suggested he would not wish to renew Yellen’s term, which expires in 2018, but then there are a lot of things being said on campaign trails. 

The discussion today is about the U.S. economic outlook and it seems likely that a relatively clear signal of the intention to raise rates in December is on the cards.

The question to the Fed is not really about December, but the real question is: “What next?”

Whether Trump could be a next Reagan and puts in place, as President Reagan did, a loose-fiscal-tight-policy combination, will probably be best judged by history.

That said, it’s a fact that the actual Fed Chair Janet Yellen is no Paul Volcker, who was Fed Chair under President Reagan.

U.S. consumer price inflation is also due today and that should underscore, once again, that on most measures, U.S. inflation is perfectly normal. Core consumer price inflation is running at around 2.25 percent these days.

It’s worth noting that the recent bond selloff barely reflects that normal level of inflation.

The Trump inflation effects, particularly the threat of higher inflation for the one third of the consumer price basket that is represented by the cost of shelter, is something that can be anticipated next year perhaps, but it’s only likely to be felt in 2018.

The EU final consumer price inflation for October came in at 0.5 percent on the year, which was up from 0.4 percent in September. Base effects have continued to drive the inflation rate higher from 0.1 percent year-on-year. Core consumer price inflation remains at 0.8 percent on the year, suggesting that there is more room for base effects to impact the headline measure.

Investors could do well keeping in mind that the issue is less about the headline inflation rate than it is about the divergence of the inflation experience among the Euro area states that goes from negative 1.0 percent in Bulgaria to plus 1.9 percent in Belgium.

The European Central Bank (ECB) faces a difficult task to keep pumping money into the economy if some components of the Euro area would to see inflation rates rising above 2 percent and certainly if it were to see an inflation rate at 3 percent.

Keep in mind that moves above 2 percent in some parts of the Euro area are very likely in 2017 and the 3 percent figure doesn’t take that much effort to achieve.

The UK retail sales have increased 7.40 percent in October of 2016 year-on-year, which is its highest mark since April 2002.

That figure underscores the fact that the UK consumer has managed to avoid the full effect of sterling’s weakness so far while the labor market has remained supportive.

Etienne "Hans" Parisis is a bank economist who has advised global billionaires and governments on the financial markets and international investments.