5 things to start your day

[Bloomberg Markets]( [FOLLOW US [Facebook Share]]([Twitter Share]( [SUBSCRIBE [Subscribe]](  Forward Guidance  Yellen lifts the dollar, Trump to announce tax cut plan, and May's Bombardier headache. December hike Market-implied odds of a U.S. rate rise before the end of the year have climbed above 60 percent after Federal Reserve Chair Janet Yellen said yesterday that the bank should be [“wary of moving too gradually](.” The Bloomberg dollar index headed for a [five-week high]( and the yield on the 10-year Treasury was at 2.29 percent by 5:50 a.m. Eastern Time. Yellen said that it would be [imprudent to wait]( for inflation to hit the 2 percent target before tightening further, as she heads into what could be her last few months as Fed chair, with Republican Senator Richard Shelby on Tuesday saying he [didn’t think]( President Donald Trump would reappoint her. Tax plan The White House and GOP officials will launch a tax reform plan later today. It’s likely to include a corporation tax cut from 35 percent to 20 percent and a reduction in the top individual rate to 35 percent, while Congress will be allowed to decide whether to impose a [higher rate](on top earners, according to people familiar with the plan. Following the latest [failure]( to repeal Obamacare, both the president and the Republican Party are seeking a legislative win on this [key campaign issue](. Washington insiders expect a battle in Congress as lawmakers disagree on key elements of the fiscal plan. May Bomb[ardier]shell Despite efforts from British Prime Minister Theresa May to the contrary, the U.S. Commerce Department slapped import duties of [220 percent]( on Bombardier Inc.’s new jetliner. This matters for May as it’s one of the [largest employers]( in Northern Ireland, the home turf of the Democratic Unionist Party upon whom she relies for support in parliament. She said the decision was “[bitterly disappointing](.” It was also a blow for debt investors; the aircraft maker’s euro-denominated bonds tumbled by the [most in two years]( after the announcement. Markets rise The S&P 500 Index posted a [0.01 percent gain]( Tuesday, narrowly avoiding a fourth day of losses. Overnight, the MSCI Asia Pacific ex-Japan Index was little changed, while Japanese stocks fell as more than 1,000 companies traded ex-dividend, pushing the Topix index 0.5 percent lower. In Europe, the Stoxx 600 Index was 0.3 percent higher at 5:50 a.m., with S&P 500 futures [gaining 0.1 percent](. Fed-speak week continues The embarrassment of riches in monetary pronouncements continues today with Minneapolis Federal Reserve President Neel Kashkari speaking at 9:15 a.m., St. Louis Fed President James Bullard at 1:30 p.m., Governor Lael Brainard at 2:00 p.m., and Boston Fed President Eric Rosengren taking the evening slot at 7:00 p.m. In economic data, U.S. August durable goods orders figures are due at 8:30 a.m., and pending home sales at 10:00 a.m. The [oil market]( will be watching the EIA inventory report at 10:30 a.m. Here's what you should read today - Just 3 percent of a huge [China dollar bond]( was bought by non-Asians. - Why [cheap stocks rallied]( while FANG tumbled. - The massive hedge fund [betting on AI](. - A vacuum billionaire’s long journey to make a car that [doesn't suck](. - The mystery of the $1.8 billion [Korean bond selloff](. - Scientists turn [landfill gas]( into protein. - Inside the battle to [save chocolate](.  And finally, here’s what Tracy’s interested in this morning  Time to rip up the script on inflation? It wouldn't be a first. As economist Charles Goodhart has repeatedly pointed out, we’ve already gone through a series of narrative shifts when it comes to explaining just how inflation works, with particular theories (be they relative bargaining power or the Phillips curve) drifting in and out of fashion through the decades. Now, it feels like we’re on the verge of another regime shift with prominent monetary officials from [Janet Yellen]( to [Claudio Borio]( giving speeches, just over the past few days, about the mystery of low inflation and policy makers’ seeming inability to do much about it. Borio’s speech, in particular, contains a [footnote]( that has escaped attention but would be stunning if true: “Over sufficiently long horizons, low interest rates become to some extent self-validating: too low interest rates in the past are one reason for such low interest rates today.” Is he right? There are other competing theories to choose from, including one from Goodhart himself that says a pickup in prices is only a matter of time as populations in China and Europe age. Whatever paradigm we choose to explain inflation now, it feels like only one can be right. It also feels incredibly weird that we still don't understand what's a fundamental concept of economics, and a key underpinning of financial markets.   Before it's here, it's on the Bloomberg Terminal Find out more about how the Terminal delivers information and analysis that financial professionals can't find anywhere else. [Learn more.](   You received this message because you are subscribed to the Bloomberg Markets newsletter.   [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( Bloomberg L.P. 731 Lexington, New York, NY, 10022