Danske Research Team
Danske Bank A/S
Market Movers
The main event will be the FOMC meeting tonight. There will be no press conference following today’s announcement. Instead, focus will be on the statement released in connection with the announcement. We expect the Fed’s rhetoric to turn more hawkish, which will keep our long-held call for a September hike alive. In particular, we expect the Fed to signal stronger confidence about the outlook for the US economy. The main risk to our call for a September rate hike have been the so-called international developments and it will be interesting to see how the FOMC relates to the recent turmoil on the Chinese equity market.
In Germany and France consumer confidence data is expected to remain unchanged compared to the previous month.
We have a series of data releases out of Scandinavia this morning including unemployment rates in Norway and Denmark and the Swedish KI confidence survey.
Selected Market News
Risk sentiment improved yesterday supported by a stabilisation in the Chinese equity market. The bourses in Europe and the US ended the day higher, while the EUR reversed some of its gains from the previous day. The 10 year US-Germany yield spread widened a few basis points as the German government bond ended the day broadly unchanged, while yields on 10-year US treasuries rose 3bp to 2.25%.
In the FX market, the GBP gained against both the EUR and USD yesterday on solid Q2 GDP figures, showing that UK growth rebounded in Q2 to 0.7% q/q from 0.4% q/q in Q1. See UK: Growth rebounded in Q2 - focus now on next MPC meeting for details.
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