After a tumultuous week, the global capital markets are struggling to stabilize.  Chinese equities were under sharp downward pressure following news reports that the large-scale intervention was to end.  However, stocks roared back in late dealings, and other reports indicated that brokerages were being asked to boost their contribution to the equity market rescue fund by another CNY100 bln (~$15.7 bln).  

Meanwhile, the message from Jackson Hole was the officials in US, Japan and Europe expect inflation pressures to increase.  The signal from Fed officials was a rate hike this year remained likely, and a move in September could not be ruled out.  

The macro economic data seemed less important in comparison.  Japanese data was simply disappointing.  July industrial output was expected to rise by a minor 0.1%, but instead it fell 0.6%. This pushed the year-over-year rate to 0.2% from 2.3% in June.  The consensus was for a 0.8% increase.  Housings starts rose 7.4% in July year-over-year.  The consensus expected an 11.0% increase after 16.3% in June.  More broadly construction orders collapsed to -4% in July (year-over-year) after a 15.4% rise in June.  

The yen advanced in the foreign exchange market.  Its two main pulls, equities and US yields helped lift it.  The dollar slipped below JPY120.90, but held the pre-weekend low near JPY120.65 before finding a better bid in the European session in which London markets are closed for a bank holiday.    The JPY121.40 area capped the  bounce.   A break now of JPY121.00 could see a retest on the lows.  

In the eurozone, the unchanged year-over-year rate of 0.2% and 1.0% core rate were only favorable because the consensus had expected a small softening.  The new was not sufficient to blunt expectations that ECB President Draghi will emphasize the flexibility of its asset purchase program that can be expanded or extended as needed.  European debt markets are firm and equities are heavy.