Silence before the storm today

Market movers today

• Silence before the storm today as there are no big key figures in an otherwise very busy week. Only release of interest is US pending home sales, which is a good leading indicator for existing home sales. The numbers have been quite strong recently showing a clear rebound in the past two months as also signalled by an improvement in the NAHB housing index. Other housing data are still soft, though, as building permits and new home sales have disappointed. The housing market is one of the areas that Janet Yellen still highlighted as weak as she said ‘the housing sector, however, has shown little progress... and readings this year have, overall continued to be disappointing’.

• The Fed is thus also likely to still see housing as the weak spot in its statement at the Wednesday meeting, which will only provide a statement (no press conference or projections this time). We expect the tone, though, to be a bit more positive on employment given Janet Yellen’s comments in the testimony that the labour market had improved faster than expected.

• In addition to the Fed meeting this week we get ISM and non-farm payrolls in the US and euro-area releases for flash CPI for July and ECB bank lending survey.

• In Denmark, June’s securities statistics and portfolio investment data are scheduled for release. For more on Scandi markets see page 2.

Selected market news

With the latest additions to the EU sanction list against Russia, a total of 87 individuals and 20 organisations and companies are now on the list. Furthermore, the EU is set to agree on so-called ‘phase 3’-sanctions tomorrow, which target specific economic sectors. That will likely include restricting access to capital markets for state-owned Russian banks and an embargo on arms trade as well as trade with dual-use technologies and energy technologies. The trade bans will probably be limited to future contracts and should not affect current supplies of energy, natural gas and other commodities.

While, in our view, the impact of the conflict and the subsequent sanctions is mostly isolated to the Russian economy – the Russian stock market plummeted further on Friday – the tightening of sanctions against Russia looks to be a cause for concern in the global oil and grains market as well as the European natural gas market. Prices on oil, wheat and European natural gas were pushed higher on Friday, as worries in the markets that new sanctions could restrict Russian commodity trade clearly rose.

Moody’s upgraded Portugal’s sovereign rating by one notch to Ba1 and stable outlook on Friday evening following market close. Portugal is close to regaining investment grade status with only one notch missing from Moody’s and Fitch, while S&P is still two notches below investment grade level.