Market movers today

  • A busy week is coming up where the main focus will be on the Fed meeting on Wednesday , where we look for the Fed to prepare markets for a July cut and a total of 75bp cuts in H2.

  • Before that the ECB will take centre stage at the ECB Forum in Sintra , which starts today with opening remarks by ECB President Mario Draghi. Pressure is increasing on the ECB following a steep decline in market inflation expectations, weak growth data and soft inflation numbers. Later this week important decisions loom at the EU Summit.

  • Today we will get the first indication from the US of the Empire index for June. It surprised to the upside in May but the consensus expectation is a drop back in the June reading to 11.0 from 17.8. The US NAHB housing index is also up for release today.

  • In the UK, the Conservative Leadership contest continues with Boris Johnson being the favourite to become new Conservative leader and prime minister.


Selected market news

Asian stocks traded mixed at the beginning of a big central bank week. On Wednesday, we have the FOMC, where we expect Powell to open the door wide open for a July rate cut. We also look for September and December cuts.

On Thursday, the Bank of Japan (BoJ) wraps up a two-day policy meeting. It is one of the small meetings, with no new forecasts on GDP and inflation. We expect the BoJ to keep its 'QQE with yield curve control' policy unchanged.

In Norway, we expect Norges Bank to raise its policy rate by 25bp to 1.25% at Thursday's rate-setting meeting, as indicated clearly both in its March monetary policy report and even more so at its May meeting.

On Thursday, the Bank of England meeting is probably not important. In our view, the bank is firmly on hold.

Sentiment regarding positive news on a China-US trade deal remains sour. US Commerce Secretary Wilbur Ross repeated that a trade deal is unlikely to emerge after a possible meeting between US President Donald Trump and Chinese President Xi Jinping at the G20 summit in Osaka later this month. As the US is collecting billions in tariffs, Trump said he is in no rush to reach a deal with China and "it doesn't matter" if Xi agrees to meet him at the G20 summit. Meanwhile, trade war escalation continued on other fronts as India imposed higher tariffs on 28 US goods in response to Washington's withdrawal of key trade privileges for New Delhi. The US goods affected by the newest Indian tariffs are iron and steel products, tube and pipe fittings, etc. The increase also hit food.

Crude saw support as Saudi Arabia's energy minister stated he was confident that OPEC and its partners are likely to approve further output cuts into H2 19 during a meeting scheduled for the first week of July.

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