Market movers today

This morning, a lot of Swedish data are due out. At 09:00 CEST, we get consumer and business confidence in July. At 09:30 CEST, the Q2 GDP indicator and unemployment data for June are due out.

Also some regional German inflation figures for July are due out this morning ahead of the national figures at 14:00 CEST.

EU consumer and business confidence indicators are due at 11:00 CEST.

In the afternoon, US pending home sales in June are due out. We will monitor how the housing market is developing after a very hot start to the year.

In the US, bipartisan infrastructure talks are continuing. 

The 60 second overview

FOMC: Like in June, the Fed statement was more hawkish than anticipated at the July meeting, see Fed Research: Review - Another step towards less accommodative monetary policy, 28 July. The Fed now says that "the economy has made progress towards" the goals and that the Fed "will continue to assess progress in coming meetings". The Fed repeats, though, that high inflation is due to "largely reflecting transitory factors" and highlights that labour market developments continue to be key for the timing of the tapering of asset purchases. We continue to expect that the Fed will turn more and more hawkish in coming months so that actual tapering will start in Q4 and the Fed will signal this on the September meeting where we have two more employment reports.

Inflation watch: This morning we launched a new publication, Global Inflation Watch, which provides an overview of global inflation trends and drivers, see Global Inflation Watch - Lift from commodities fading. It will monitor whether inflation pressures are indeed transitory or not and how underlying pressures from the labour market develops.

Equities: US stocks got a small lift from the Fed statement but closed broadly flat with tech stocks outperforming while industrials were slightly lower.

The Chinese offshore index in Hong Kong is up more than 3% this morning after China took steps to calm recent investor fears. Chinese authorities underlined in a meeting with bank executives that education policies were not meant to hurt companies in other industries and a report stated China will continue to allow Chinese companies to list in the US as long as they meet listing requirements. The central bank also added liquidity to the market. A Politbureau meeting this week will be watched closely for clues on regulation and economic policies.

FI: The Fed statement sent US bond yields slightly higher, but they fell back during the more dovish message from Fed governor Jerome Powell during the subsequent press conference. US 10-year yields trade 2bp lower than before the meeting.

FX: EUR/USD ended the day higher above 1.18 after the FOMC meeting. Scandies gained ground vis-a-vis EUR, with EUR/SEK falling to 10.18 and EUR/NOK to 10.43. USD/CNY dropped back below 6.50 after the big rise yesterday.

Credit: Sentiment improved in credit markets yesterday where iTraxx Xover tightened 3bp (to 235bp) and Main ½bp (to 46½bp). Both HY and IG cash bonds closed unchanged.

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