Market movers today
In the euro area, the ECB minutes from the July meeting are set to be released today. Focus will remain on discussions related to extension of the QE programme. At the meeting, the Governing Council was unanimous in setting no precise date for when to discuss changes to the QE programme and additionally, Draghi said the ECB had not tasked its staff to look into QE options after December. In light of this, it will be interesting to see how the discussion within the Governing Council has evolved around extending QE (see ECB review: QE path not defined yet but slower purchases are coming, 20 July 2017 ).
The UK retail sales figures for July are out today, which markets tend to pay at tention to, although they can be misleading with regard to the overall condition of private consumption. However, due to declining consumer confidence and negative real wage growth, we believe that the figures will reflect only modest growth in private consumption.
In the US, today’s data releases include the initial jobless claims and industrial production numbers for July as well as the Philly Fed business conditions index. Additionally, Dallas Fed President Kaplan (voter, dovish) speaks this evening.
Selected market news
Risk appetite took a small hit yesterday as news broke that Trump’s CEO Business Council was breaking up. The decision came after a conference callon Wednesday among the members on which 10 more members voted to leave the council. Trump’s reversal at his press briefing on Tuesday about the events in Charlot tesville last week seemed to be the trigger for most members. At the press briefing on Tuesday Trump stated once again that ‘both sides’ were responsible for the events. The latest development has also spurred further speculation that some top officials may leave the administ ration. US bond yields fell back in response to the news and stocks gave up early gains to finish broadly unchanged.
FOMC minutes yesterday revealed a discussion heavily focused on inflation with differing views with some expressing concern over the low inflation while others highlighted a risk of an overshoot later if the labour market continued to tighten. Most members still believe in the Phillips curve framework, although recent developments have raised uncertainty. On the reduction of t he balance sheet " participants generally agreed that , in light of their current assessment of economic conditions and the out look, it was appropriate to signal that implement ation of the program likely would begin relatively soon".
According to a Reuters report yesterday, ECB president Mario Draghi will not deliver a new policy message at the Jackson Hole symposium next week. According to the report , two sources said that Draghi was keen to hold off on the policy discussion until the autumn, as agreed at the last ECB rate-setting meeting in July.
On the North Korean crisis South Korean President Moon Jae-in said Donald Trump had agreed to ask for consent before taking any action such as a military strike. This reduces further the risk of a war on the Korean Peninsula.
