Market movers today
- While waiting for Fed chair Powell’s speech at Jackson Hole tomorrow, we may start to get some headlines from other FOMC members already today.
- Besides that we have a couple of interesting data points today. Euro M3 and credit will provide more clues on the stimulus from monetary policy and demand for credit. After a sharp increase in money growth during 2020, the momentum has come down this year pointing to lower economic growth in the pipeline.
- ECB minutes are due out today.
- US releases jobless claims, which have moved lower in recent weeks pointing to further strength in the labour market.
- Overnight China will release data on industrial profits. After a very strong period, we expect profit growth to come down as the economy is slowing.
- Swedish PPI and employment data are due out today but are not expected to move markets.
The 60 second overview
The US is set to approve booster shots after six months due to wanting immunity amid a big delta outbreak in many states. A decision is likely in mid-September.
EU will today discuss whether to re-impose restrictions on visitors from the US. The fact that COVID-19 is still with us continues to create problems for some sectors, here possibly the tourism sector in Europe. COVID-19 is also creating problems for supply chains, as e.g. South East Asia is hard hit at the moment.
Hike in South Korea: The Bank of Korea hiked the policy rate by 25bp to 0.75%. Usually, this is not a major news in the markets we are covering but still a sign that central banks are more upbeat around the world (although to a different degree).
Equities: Global equities posted small movements on Wednesday, although US managed to new records. The big story was however investors seeking exposure towards value sectors, like banks, industrials and energy. Meanwhile, health care and tech continued to lag. S&P logged its fifth consecutive gain up 0.2%, Dow 0.1%, Nasdaq 0.2% and Russell 2000 0.4%. Equity sentiment muted again this morning with Asian markets slightly lower and US futures the same.
FI: Yesterday, European bond yields rose and the spread between the core-EU and periphery widened ahead of the Jackson Hole conference, which will begin today and where Powell will speak tomorrow. There was a string of comments from ECB’s Lane yesterday on PEPP, Covid-19 and the economic outlook. The key message in our view was that – ECB will re-calibrate PEPP at the Sep meeting on higher staff projections, BUT also they want to downplay that re-calibration confirming their goal to achieve favourable financing conditions. The above is fully in line with our expectations.
FX: Yesterday was very quiet in the FX markets with EUR/USD, EUR/GBP, EUR/NOK and EUR/SEK broadly unchanged ahead of Fed Chair Powell’s speech at Jackson Hole tomorrow.
Credit: Credit continues to demonstrate cautious optimism with marginal spread tightening. Main closes at +46bp, some 0.2bp tighter, while xover was tighter by 0.3bp ending at 231bp. Primary market activity is picking up, with several deal announcements yesterday.
Nordic macro
Today, PPI’s, household lending data and employment figures (all for July) are set for release. Whereas PPI and lending data might be interesting in their own right, they are unlikely to matter for markets and as Statistics Sweden’s data still suffer from quality issues, these remain a lesser priority for markets as well.
