We are now in a quiet period for the equity markets. August is where many traders take vacations, and daily volume is relatively light.

On the docket this week is a last batch of S&P550 earnings reports for the second quarter. 44 firms release earnings, including Walt Disney.

Looking abroad, I reproduce five big Reuter’s in London themes. These likely dominate the thinking of investors and traders in the Global Week Ahead.

They concern fixed income and FX, not equity markets: the U.S. CPI, Japan’s bond rates, the Chinese yuan, Italian bonds and banks, and the Turkish lira.

(1) Will U.S. Consumer Price Inflation Pick Up?

Stubbornly low inflation has been described as the dog that didn’t bark. Indeed, inflation has stayed weak even as global stocks have rallied hard in the past decade. But is the dog about to start barking?

It’s a question markets are sensitive to, and Friday’s consumer inflation data will be next week’s most closely watched U.S. data point.

Year-on-year core CPI, which measures prices that consumers pay for frequently purchased items, has been inching up. June’s core CPI was 2.3% and is seen holding steady in July. But on a monthly basis, prices are expected to rise 0.2% versus a 0.1% increase in June, Reuters forecasts show.

June’s near-flat reading was driven by moderate gasoline price gains and falls in apparel and hotel costs. The U.S. Federal Reserve’s preferred inflation measure, the PCE price index, has also this year hit the 2.0% target for the first time in six years.

(2) Pay Attention to Japan’s Bond Rates

The Bank of Japan’s plan to give banks some relief from years of near-zero rates proved to be a minor policy tweak that lifted the upper bound of its 10-year yield target to 0.2 percent. Yet for a market resigned to seeing ultra-long bond yields trending steadily down to zero, even this small step was significant.

Thirty-year bonds, popular with Japanese pension funds and insurers, saw yields spike 17 basis points to 0.85 percent in less than two weeks. That took yields close to the one percent level at which insurers’ returns match the payout promises they made to policyholders.

If yields keep rising, government bond returns will compensate local investors for the narrow spreads they currently make on fully-hedged purchases of U.S. Treasuries or German Bunds.

Japanese investors have already started selling Treasury holdings. Their total foreign debt investments amounted to $2.1 trillion at the end of 2017 — data on Thursday will show if these holdings are being pared back.

(3) Watch China’s Currency for Calculated Government Moves

Washington has imposed duties on $34 billion of imports from China, and threatened more. Beijing has announced levies on $60 billion of U.S. goods. And as the trade war gets going, China-watchers will keep eyes trained on next week’s July trade figures to gauge the initial damage from the spat.

They will also watch the yuan. Having hit 14-month lows, it rallied after authorities raised forward forex reserve ratio requirements.

It is unclear whether a weak currency is part of China’s stimulus toolkit or a means of retaliation against tariffs. Historically, there is no correlation between the exchange rate and the bilateral trade between the two countries. But a weaker currency will doubtless make life easier for exporters.

The week may show if the currency has indeed hit a trough, or if the central bank move was just a warning to speculators who have started seeing yuan weakness as a one-way bet.

(4) Watch Italian Bonds and Banks

As more Italian banks report second-quarter earnings, numbers from UniCredit, the country’s biggest lender by assets, and smaller peers will be scanned for signs of damage from sovereign stress. BPER Banca, Credito Valtellinese and Popolare di Sondrio are among lenders due to report results.

A bond market rout in May around the formation of an anti-establishment coalition government is likely to have inflicted painful cuts to the value of banks’ holdings of government bonds. Italy’s worsening outlook has already driven 10 consecutive weeks of earnings downgrades.

The key metric to watch is the capital adequacy CET1 ratio and how this was impacted by the sell-off in government bonds. Reported by banks alongside profit-and-loss statements, the CET1 highlights the gap between banks with healthy balance sheets and others whose capital buffers are thin.

Fears are that the finances of Italy’s weaker banks are on shakier grounds. A drop in bond values caused a 140 basis point (bps) hit to Monte dei Paschi’s CET1, while heavyweight Intesa Sanpaolo announced a manageable 35 bps erosion.

The focus on capital erosion may even overshadow banks’ progress in reducing non-performing loans. Executives will also be quizzed on how they assess political risks before the next budget comes up for discussion in autumn.

(5) Watch the Turkish Lira

Turkey’s collapsing lira may have driven inflation to over 14-year highs but it’s done wonders for the country’s tourist industry, which enjoyed a 30 percent surge in the number of foreign visitors in June.

Those tourism revenues may help with Turkey’s other big economic problem — its current account deficit. They are a major source of funding for the deficit which ballooned to $5.885 billion in May, well above forecasts.

Figures for June are out on Friday. They could determine if the lira suffers another major leg lower, after tumbling this week to new record lows below 5 per dollar.

Top Zacks #1 Rank (STRONG BUY) Stocks—

Caterpillar (CAT Quick QuoteCAT - Free Report) : This is a $138 a share/$82B market cap stock. It also holds an A for Value and a B for Growth.

The trade war action has hit Industrial stocks the most. Keep an eye on how this major stock trades.

BHP Billiton (BHP Quick QuoteBHP - Free Report) : This is a $50 a share/$80B in market cap mining stock. That fits into the Materials sector.

Seeing a stock like this on the Zacks #1 Ranks tell you the global economy is indeed growing, and China is fine.

Celgene : This is a $90 a share/$63B in market cap biotech stock.

The Health Care sector has been driven by health services stock recently. Seeing this stock on our #1 list is notable, as it is a large cap biotech name.

Key Global Macro—

This should be a relatively light week for U.S. market risks. Congress is on recess. The Fed is slipping into a hush period between an uneventful recent policy statement and its annual Jackson Hole Symposium held from August 23–25.

NAFTA negotiations continue quietly in the background, mostly between the U.S. and Mexico, at the moment.

On Friday, the U.S. CPI for July arrives, following the same month’s producer prices (the PPI) the day before.

On Monday, Chile’s Proxy GDP (ex-Mining) is at +4.7% y/y. We get a fresh read.

On Tuesday, the Reserve Bank of Australia (the RBA) sets its overnight rate. It has been fixed at 1.5%.

Germany’s industrial production is at +3.1% y/y. We get a fresh reading.

Mainland China’s exports and imports data come out. Exports have been growing +11.2% y/y and imports +14.1% y/y. This data will be closely scrutinized, for trade war effects.

On Wednesday, Brazil’s FGV inflation rate comes out. It should rise from +7.79% y/y to +8.59% y/y.

On Thursday, Mexico’s ANTAD same store sales (retail sales) comes out. It has been growing +7.9% y/y. It may fall to +5.0% y/y. That is still solid, though.

The unemployment rate in Switzerland is a super low 2.6%.

U.S. initial claims for unemployment are also super low at 218K.

Mexico’s bi-weekly CPI may go from +4.85% to 4.77% y/y.

On Friday, Mexico’s nominal wage growth comes out. It has been +5.6% y/y and it could go to +5.0% y/y. This is largely tracking the CPI, with about -0.5% added in real terms.

Brazil’s retail sales should grow +2.6% y/y in the pending reading. This is much, much weaker than Mexico.

Canada’s unemployment rate comes out. It has been 6.0%, and it should stay 6.0%.

The U.S. Consumer Price Inflation (CPI) rate comes out. It should be moving from +0.2% to +0.24% m/m, in ex-food and energy terms.