Market movers today
CPI figures for July in Denmark and Norway are the highlights of the day on the data front. We expect Danish CPI inflation to plunge to 0.0% in July (from 0.3% in June), after the government’s summer package reduced prices for a range of cultural experiences. In Norway, we expect core inflation to remain unchanged at 3.1%. Finally, in Sweden, the June consumption indicator will reveal how the consumption pattern has been dented by the coronavirus in Q2 (see next page).
Sentix investor confidence for August is set to be released in the euro area and, given the continued risk-on mood combined with positive euro macro data surprises that pushed the euro surprise index into stretched positive territory, we expect a continued uptrend.
Markets will also keep a close eye on the latest virus developments. While COVID-19 cases have been slowing down in the US recently, infections have started to rise again in a number of European countries with the advent of the summer travel season. The next steps in the US stimulus bill drama will also be keenly watched, after President Trump took executive action over economic relief measures over the weekend (see more below). Finally, Joe Biden is expected to announce his choice for running mate in the US presidential election this week.
Selected market news
US President Donald Trump announced on Saturday four executive orders on various stimulus measures. These include temporary payroll tax deferral for lower incomes, an extension of expanded jobless benefits at a lower rate – USD400/week, down from USD600/week before – and eviction protection and student-loan relief. The decision is likely to be scrutinised, as it is uncertain whether the move lies within the President’s congressional power.
On the data front, Chinese inflation figures came about as expected overnight. CPI rose 2.7% y/y in July – up from 2.5% y/y in June – and PPI shrunk 2.4% y/y in July from 3.0% y/y in June.
On the COVID-19 front, Italy and UK reaffirmed decisions to reopen schools in September and Paris will make masks mandatory on busy streets as of today.
The US oil industry is still struggling to recover from shock to demand. The weekly rig count fell to a new low of 176 on Friday. Hence, the rebound in oil prices back to more profitable levels has not led to a pick-up in drilling activity.