Attention is still on a deal between Greece and its creditor institutions

Market Movers

• Attention is still on a deal between Greece and its creditor institutions. Today the EU leaders meet for a two-day summit starting at 16:00 CET. The intention was that the leaders should sign an agreement, which should have been reached at yesterday’s Eurogroup finance ministers meeting, but the creditor institutions and Greece have not yet found common ground and there is still some way to a final deal. The negotiations continue this morning and the Eurogroup is set to meet again today at 13:00 CET.

• In the US personal spending and income for May is due for release. The strong May retail sales report should be mirrored in the data on personal spending, which we expect to show an increase of 0.8% m/m. We look for an increase of 0.6% m/m in personal income as continued strong job growth is supporting household income.

• US PCE inflation, which is the Fed’s preferred measure for inflation, should increase a bit in May. Core PCE is expected to increase 0.1% m/m in May in line with the improvement over the past couple of months. The yearly rate is expected to remain unchanged at 1.2%, which is low compared to the Fed’s 2% long-term target but it is expected to improve within the coming year.

• Initial jobless claims in the US are expected to increase a bit but to continue to suggest that labour market improvements remain on track in June. Continuing claims should decline further after it jumped in the beginning of June.

• Today we publish our quarterly Nordic Outlook including our new forecasts on the Nordic economies, see more on page 2.

Selected Market News

Yesterday’s Eurogroup finance ministers’ meeting was very short and ended without an agreement ready to be signed by the EU leaders at the summit today. The lack of an agreement followed after Greek Prime Minister Tsipras had meetings with the heads of the Institutions (IMF, ECB and EU Commission) most of the day. Here, the IMF maintained a hard line rejecting most of the new Greek reform proposal as it focused too much on tax hikes and less on pension and growth-enhancing reforms. See WSJ for a five-point list on which Greece and its creditors are still at odds. We still believe a deal will be reached the very last minute as there is too much at stake for both sides. Under the current plan, a deadline for a deal among the EU leaders seems to be Friday at the summit after which the Greek parliament will have to approve the measures over the weekend followed by the German parliament accepting the new deal Monday or Tuesday just before the IMF debt repayment.

The ECB did not raise the Greek emergency liquidity assistance ceiling yesterday. This was the first time after the ECB started to raise the ceiling on a daily instead of a weekly basis at the end of last week and reflects less deposit withdrawals on Wednesday. However, the pressure on the Greek banking system will increase again if the prospect of a deal starts to vanish.