Market movers today
Today, PMI services indices in June for several countries are due out . Especially the UK index may at tract attention, as both the manufacturing and construction indices fell, suggest ing GDP growth might have remained weak in Q2 after the slow growth in Q1.
In the Nordics, Swedish production data for May is due out at 09:30 CET and Norwegian house prices in June at 11:00 CET.
In the US, the FOMC minutes from the June meeting are due out at 20:00 CET. We will look out for comments on when the Fed will start ‘quantitat ive tightening’ (shrinking the balance sheet ) and internal discussions about how the FOMC members see the trade-off between low unemployment and low inflation.
We expect the Polish central bank to maintain the policy rate at 1.50%. See also Flash Comment: Too early for NBP to join the hawkish camp, 4 July 2017.
Selected market news
It has been a quiet night both in terms of market news and price act ion. Most important is the escalation of the North Korea crisis after the missile launch yesterday, see also Flash Comment: Further escalation of the North Korea crisis, 4 July 2017. The launch is further testimony that North Korea is continuing to move on with its nuclear ambit ions. Today at 20:00 CET, t he UN Security Council is due to meet to discuss the situation. It will also be discussed at the upcoming G20 meeting, as Japan, South Korea and the US are scheduled to have trilateral meeting about what t o do. Japan’s P rime Minist er Shinzō Abe has also said he wants to discuss it with his Russian and Chinese counterparts.
Yesterday, the Riksbank kept the policy rate unchanged and removed its small rate cut probability in the updated rate path as expected. There were no signs of hawkishness in the statement . Indeed, quite the opposite. The Riksbank argues that growth is strong and inflation is approaching 2%, but adds that a continued expansionary policy is needed to stabilise inflation around 2%. The international economic backdrop has improved and setback risks have declined, but global inflationary pressures are deemed to st ill be subdued. It seems the Riksbank is uncertain about the stability of inflation expectations given the long-term sub-target development
