Asian markets are mixed, with Japan closed for a holiday. Chinese markets and Hang Seng are posting modest gains, led by banks and insurers, as investors hope upcoming data will show that China’s economy is recovering. Markets were struggling for direction though, as the focus remains on central bank action. WTI crude oil is slightly higher on the day at USD 41.55, after falling yesterday after a big EIA gas draw and crude build.

German Housing Market Remain Robust

German housing market remains buoyant, which will continue to fuel concerns that the ECB’s very expansionary policy and the low interest rate environment could fuel a house price bubble in the Eurozone’s largest economy. House prices rose 4.4% in Q1, and prices for new houses rose nearly 34% in the 10 years to June, according to Hypoport data. Demographic changes and a rise in single households are also driving the uptick, although this was also said to be the case for Spain, and an argument against warnings of a bubble, before the subsequent crash.

New housing orders jumped 22.6% year over year in May, and demand is likely to remain very strong, as the immigration crisis is adding further pressure and investors are looking to alternative investments as interest rates crash and German government bond yields have turned negative. The Bundesbank is keeping an eye on the situation, but while Draghi relies on national regulators to keep the situation under control, a real bubble and a subsequent crash in the Eurozone’s largest economy would have severe negative consequences for the rest of the Eurozone and if confidence in the union’s implicit stability anchor is destroyed, even Draghi won’t be able to rescue the day.

In the U.S. the July trade price data is out Thursday and is expected to show import prices down 0.4% on the month while export prices remain unchanged. This follows respective June figures of 0.2% for imports and 0.8% for exports. The plunge in oil prices over the winter helped keep these measures in negative territory before the spring rebound allowed increases. However, oil prices eased in July which could pose downside risk to the release.