Market movers today

Today’s highlight is the US jobs report for June due out at 14:30 CEST (one day earlier as US markets are closed tomorrow). We expect an increase in employment of 4 million but the ADP jobs report released yesterday showed an increase of 2.4 million (one has to keep in mind that the ADP jobs report has a poor track record, though). Consensus according to Bloomberg is 3 million. The jobs report is old news in the sense that the negative virus development in the US has led to more local lockdowns and may imply a setback in consumption and hence employment in July.

In the US, we will also look out for the weekly consumer confidence indicator from Bloomberg due out at 15:45 CEST. The weekly index has been rising over the past few weeks but we will monitor whether we see a setback due to the negative virus development and local lockdowns. This, however, would probably not be visible already now.

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In the euro area, May unemployment data is due out at 11:00 CEST. We have two ECB speeches today with Mersch speaking at 15:00 CEST and Schnabel at 19:00 CEST.

In the Scandies, FX currency reserves data for Denmark is due out at 17:00 CEST.

Selected market news

With the FOMC minutes out last night, it looks like the Fed is going to make its forward guidance more explicit during H2. There is still no consensus on how, though. Several committee members prefer to connect forward guidance and inflation but some also prefer to target unemployment. The FOMC has also been discussing yield curve control but there are still more questions than answers in the minutes. Based on the minutes we are changing our Fed call and now think some sort of average inflation targeting is more likely than a combination of average inflation targeting and yield curve control. Meanwhile the Riksbank boosted its QE programme, now including corporate bonds (see more on page 2).

Yesterday was an eventful day on the data front. In our home markets, Swedish and Norwegian PMIs rebounded in June but remained below the 50 threshold. While this would normally suggest a further decline in industrial activity, we have seen in other countries that respondents tend to compare the current situation with the time before the coronavirus. Thus, the figures are hard to interpret currently, but rebounds below 50 likely reflect better assessments of the activity than what the figures initially indicate.

We got good news from the German labour market, with unemployment claims up by 69,000 in June, significantly less than expected. The number of people on Kurzarbeit came down to 6.7m from 7.3m in May, with the biggest drops recorded in hospitality, transport and retail, while Kurzarbeit was still rising in manufacturing. The IFO employment barometer signals that employment should continue to recover in coming months.

Asian stock markets followed Wall Street up this morning with MSCI’s broadest index of Asia Pacific shares outside of Japan up 0.9% and Nikkei up 0.4%.

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