The PMI releases in the euro area and the US

Market movers today

The data calendar is fairly thin this week, with the PMI releases in the euro area and the US as the most noteworthy global data releases. The main focus will instead be on political developments in the UK and France in the aftermath of the parliamentary elections in the two count ries on 8 June and yesterday, respectively.
Furthermore, in the UK, Brexit negot iations are bound to begin. We have writ ten intensively about the UK polit ical situat ion since the elect ion, for more see Research UK: May stats (for now) due to Brexit uncertainties, Research UK: Minority government is weak from the beginning and Research UK: Hung parliament adds government risk premium to GBP.
In the US, we will look out for any comments in speeches by FOMC members about what drove the decision on the June rate hike, which in our view was not justified by the data.

Selected market news

Global risk sent iment is solid this morning following a clear win for Emmanuel Macron and his party En Marche in the final round of the parliamentary elect ions in France yesterday. Asian equity markets are most ly up and the typically safe-haven Japanese yen is weaker against the EUR and USD. According to preliminary est imates, Macron’s part y La République en Marche and its cent rist ally Modem secured 355 of the 577 seats in the Nat ional Assembly. Hence, President Macron will enjoy a sizable majority in the French parliament , which will help him in push through an ambit ious reform agenda aimed at reinvigorat ing the French economy. Le Pen and her Party the Nat ional Front secured eight seats in parliament . However, it was also noteworthy that voter turnout was at an historical low at 44%, suggest ing widespread apathy with the current polit ical environment in France.

The Brexit negot iat ions are due to begin between the UK and EU representat ives at 11:00 today in Brussels. The launch of the negot iat ions comes at a time when Theresa May is struggling to hang on to her job. According to the UK newspaper The Times, the PM has 10 days to save her position, as she is facing the threat of rival leadership bids in the Conservat ive party. Some MPs are ready to demand a no-confidence vote, the paper said. Chancellor Philip Hammond told the BBC that Britain will leave the single market , but should aim for a gentle departure. In addition, there is still no power sharing deal with the DUP. Furthermore, the UK may have been hit by yet another terrorist at tack this morning, as a car drove into pedest rians outside a London Mosque, killing one person and injuring 10.

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