Danske Research Team
Danske Bank A/S
Market movers today
Today's main release is the US monthly private consumption data for May (including inflation prints). We do not expect PCE inflation to be a major market mover, as we have already got CPI, but we are very interested in the consumption data. Have the Americans started to buy more services and fewer goods?
Besides that, we have a couple of Fed speeches today.
It is a Midsummer in Sweden and Finland.
The 60 second overview
Bank of England: We have got used to central banks turning more hawkish lately but the Bank of England (BoE) kept both actual policy and policy signals unchanged yesterday. BoE repeated that it wants to see "clear evidence of progress" before tightening monetary policy. EUR/GBP moved higher, as investors had expected the BoE to turn slightly more hawkish.
US infrastructure: Yesterday, US President Joe Biden said "We have a deal" on physical infrastructure with bipartisan group of US Senators (USD579bn). This, however, does not mean that it is a done deal, as the deal still needs more than 60 votes in the Senate and also needs to be approved in the House, which is probably not going to be easy. CNN has a good article on the political situation. The Democrats still plan to pass other stuff (likely including more money for health care, child care, and education) through the budget reconciliation process (only a simple majority needed).
Equities: Equities broadly higher yesterday as a string of non-macro-related issues came in positive yesterday. MSCI world just shy of all-time high as heavyweight indices like S&P500 and Nasdaq made new all-time highs. Gains were remarkably broad-based among sectors, regions, and styles though with a small tilt towards cyclical, value, and small caps. VIX drifted lower for the fourth consecutive day ending at 16 and hence very close to the post-pandemic lows. In US, Dow +0.9%, S&P 500 +0.6%, Nasdaq +0.7% and Russell 2000 +1.3%. The positive momentum has carried on to Asia this morning with broad-based gains while US and European futures are also higher.
FI: After a weak opening in the morning, European bond yields performed across the board. The slightly better than expected German IFO and French business confidence may have been a contributing factor for the initial sell-off. The BoE decision, which was slightly more dovish than anticipated, drove European government bond rates lower.
FX: Scandies rose the most yesterday, where major currencies EUR,USD, and in particular GBP lost ground. EUR/NOK fell to around 10.15 and EUR/SEK to around 10.10. EUR/USD continues to hover just above 1.19.
Credit: While European equities ended yesterday in red, credit performed well, with iTraxx Xover tightening 5bp (to 230bp) and Main 1bp (to 46½bp). HY bonds tightened 1bp and IG ½bp.
Nordic macro
No major data releases in the Nordics today. In Sweden, it is a Midsummer tomorrow.
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