Market movers ahead
- We expect the ECB minutes released on Thursday to shed more light on how the discussion within the Governing Council on extending QE evolved.
- FOMC minutes are due for release next week. We expect focus to be on the timing of quantitative tightening and the committee’s view on the lack of inflation.
- We expect the decline in US consumer confidence to continue, in light of increasing tension between the US and North Korea.
- We expect UK CPI inflation to draw attention next week, as it will provide some guidance on the Bank of England’s decision on whether or not to hike rates in 2018.
- We expect Chinese industrial production, released on Monday, to post solid growth, as pointed to by the recent month’s strong PMI postings.
- The focus in Scandinavia will be on the release of Swedish inflation data. We expect Swedish inflation to pick up, reaching 2% cent in July – above the current Riksbank forecast. We expect the Danish GDP indicator to show healthy growth of 0.5% for the second quarter.
Global macro and market themes
- Tensions have risen between North Korea and the US. In our view, a military confrontation between the US and North Korea is a low-probability but high-impact event for markets.
- Yields of US and German government bonds declined this week but we believe current risk aversion is likely to be temporary, although it is set to be bumpy and headline driven.
- A pickup in US growth suggests that US yields and equities should head higher when North Korean tensions fade.
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