Focus today will be on the Ecofin meeting in the EU

Allan von Mehren Danske Bank A/S

Market Movers Today

Focus today will be on the Ecofin meeting in the EU where the finance ministers will discuss whether to punish Spain and Portugal with fines for not meeting their budget targets. It comes at a delicate time amid uncertainty over Brexit and no wishes to stir further EU resistance in member countries.
On the data front it is still fairly quiet. The US NFIB small business index is expected to edge slightly higher in June in line with the development seen in both the ISM manufacturing and non-manufacturing indices.
Fed members Kashkari (voter, neutral) and Bullard (voter, neutral) are scheduled to speak. Comments on the effects of Brexit and the stronger upbeat employment numbers in June will be most interesting.
Sweden releases inflation today. Underlying inflation is expected to rise to 1.5% y/y in June from 1.1% y/y in May. Underlying inflation has trended higher since 2014 but has lately stalled in a range of 1-1.5%.

Selected Market News

Risk appetite continued higher yesterday, as the S&P500 set a new record. The positive sentiment has carried over to Asian markets. US stocks have been supported lately by stronger data and record low yields, as the Fed is in a wait-and-see mode and sharp declines in European bond yields are making US bonds more attractive. The risk from Brexit is also fading as there are no signs that EU support is waning in other EU countries, on the contrary.

Japanese stocks rallied strongly for the second day in a row as Shinzo Abe ordered new fiscal stimulus and the JPY weakened further.

Theresa May was ‘crowned' as the new British Prime Minister yesterday, as the only remaining candidate, Andrea Leadsom, withdrew from the race, see Brexit Monitor #19: Theresa May ‘crowned’ as new Prime Minister, 11 July. Angela Eagle confirmed Monday that she would challenge the current Labour leader Jeremy Corby as party leader. Corby has been criticised for a too passive role during the election campaign and lost support from several leading members.

US bond yields rose slightly yesterday as the market is pricing in a higher probability of a Fed hike this year following positive data and a lift in risk sentiment.

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Author

Allan von Mehren

Danske Bank A/S

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