Market movers today
- Euro area industrial production for June is expected to be constrained by global supply problems despite strong demand.
- The central bank of Turkey is expected to keep rates unchanged, with the central bank caught between significant upward inflation pressures and on the other hand political pressure from President Erdogan who wants lower rates amid an economy struggling to overcome the COVID-19 wave and wildfires.
- In the US, some attention will be given to the producer price inflation which is expected to temper somewhat in July compared to June like the CPI inflation yesterday.
The 60 second overview
Macro: Japan’s PPI surprised on the upside in July increasing 1.1% m/m vs 0.6% in June and 0.5% expected by consensus.
Oil: Brent rebounded firmly above USD71/bbl yesterday. The sell-off Monday, likely related to concerns over rising infections in China, thus only lasted briefly. Oil followed the trend in rest of commodity markets, which have also recovered again.
Fed: Another round Fed speakers yesterday signalled that tapering of bond purchases is likely to start over the coming months.
Equities: Equities moved higher again in Wednesday’s trading, nudging at new highs for MSCI world and S&P500. Value companies remained in favour, with financials, industrials and materials the standouts while high flying healthcare was the only sector in red. In the US, this summarized to Dow closing up 0.6%, S&P 0.3%, Nasdaq -0.2% and Russell 2000 0.5%. Asian markets are more muted this morning with value-intense Japan the only exception. US futures signals a slow opening.
FI: It was a fairly uneventful session yesterday, leaving EGBs trading in a tight range through most of the day.
FX: NOK came out on top yesterday in the G10 currency sphere as oil prices extended the rebound from Tuesday further. USD lost out after the CPI release slightly disappointed expectations.
Credit: Credit remained under pressure yesterday where iTraxx Xover widened 1bp (to 236½bp) and Main 0.2bp (to 46.8bp). HY bonds widened 2bp and IG 1bp.
