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Growth in bank lending was unexpectedly weak in June

  • European equities started the session with a rally that run fast into resistance and was followed by a slide towards yesterday's closing levels. The price action was driven by multiple earnings results that were mixed. US equities start positively on generally better than expected earnings.

  • The number of Americans filing for unemployment benefits rebounded from a three-month low last week (from 234k to 244k), but remained below a level consistent with a tightening labour market. The US trade deficit narrowed more than estimated in June (to $63.9 billion from $66.3 billion) in a positive sign for economic growth.

  • The US economy is experiencing steady but slower growth in business investment as orders for capital equipment eased last month (-0.1% M/M) following a May increase that was bigger than previously reported (0.7% M/M from 0.2 M/M).

  • Growth in bank lending was unexpectedly weak in June, a potentially worrying sign for policymakers even if a oneoff factor may have contributed to the slowdown. Lending to EMU non-financial corporations slowed to 2.1% Y/Y in June from 2.5% Y/Y in May. Lending to households meanwhile grew by 2.6% Y/Y in June, unchanged from May.

  • The head of the Financial Conduct Authority has called for Libor, the interbank lending rate at the heart of a multibillion banking scandal, to be phased out in 2021 and replaced by more reliable alternatives.

  • US President Trump's newly appointed communications director Scaramucci shook up relations both in the White House and on the international stage, dialling in to a live broadcast on CNN to warn that Mr Trump "may veto" the Russian sanctions bill, and that his relationship with chief of staff Priebus was potentially irreparable.

  • The BoE has appointed a veteran civil servant to become its new deputy governor. Dave Ramsden – currently the chief economic adviser to the Treasury and head of the Government Economic Service – will become the new deputy governor of markets and banking, starting his five-year term on September 4.

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