Market movers today
The main release today is the US jobs report for June. We expect employment rose 180,000 due to strong ISM and Markit PMI employment indices but yesterday’s ADP jobs report puts some downside risks to this forecast . We estimate the unemployment rate was unchanged at 4.3% and wage growth rose slightly to 2.6%, which is st ill low in a historical perspective. For more, see US Labour Market Monitor: June report likely to be stronger than in recent months, 5 July.
Also, the Fed is due to release the monetary policy report today ahead of Janet Yellen’s testimony to Congress next week. The FOMC minutes from the June meeting revealed that the Fed may soon begin quantitative tightening (see FOMC Minutes: Fed likely to announce start of QT in September, 5 July).
In Sweden, we are due to get household consumption data at 09:30 CET . In Norway, we are due get product ion data at 08:00 CET.
In the UK, the NIESR GDP estimate for June and product ion and construct ion data for May are due out today.
The G20 summit begins today and there are many t hings to discuss: North Korea, Ukraine and trade/protectionism to mention but a few.
Selected market news
The European fixed income market sold off yesterday on the back of hawkish minutes from the ECB, modest demand for the long-end of France and Spain at the auctions yesterday and a technical sell-off as the 10Y German government bond yield broke through the important level of 0.5%.
Focus on global monetary policy tightening is set to be an ongoing theme in markets but both the ECB and the Federal Reserve are well aware that they have to do this gradually in order to avoid the previous policy mistakes made in 2011, when the ECB tightened monetary policy too early, and 2013, with the Federal Reserve’s taper tantrum. Hence, we expect rates to remain range-bound.
Sentiment in the Asian equity markets this morning was hit by rising rates and the hawkish minutes from the ECB. This also affected the euro versus the US dollar, with EUR/USD remaining above the 1.14 level in Asian trading.
