Market Movers
In the US the first estimate for Q2 GDP is expected to show an annualised increase to 2.5% q/q from -0.2% q/q in Q1. Consumer spending is likely to have been a major positive contributor to growth with an expected expansion of 2.9% q/q ann. in Q2. In addition to the GDP print, the annual revisions to the GDP accounts could also attract some attention. Revisions will primarily cover 2012 through the first quarter of 2015.
Initial jobless claims are expected to rebound to 270k following last week’s decline to 255k, which was the lowest level since November 1973.
We expect both German and Spanish HCIP inflation to increase slightly to 0.2% y/y in July from 0.1% y/y and 0.0% y/y, respectively, in June.
In Scandinavia, we have yet another day with multiple data releases including Swedish Q2 GDP, retail sales from Norway and unemployment and industrial confidence from Denmark.
Selected Market News
The statement from the July FOMC meeting was very little changed compared with the previous meeting in mid-June but it included an important ‘some’ in anticipation of the first rate hike. In our view, this suggests the FOMC is not far from the first rate hike and we see the statement as consistent with an FOMC that remains on track to deliver a 25bp rate hike at the next meeting in September. See US - FOMC: Only 'some' further progress needed for September rate hike for more details.
Scandi Markets
We expect retail sales in Norway rose 1.3 % m/m in June after a surprisingly large drop in May. Households’ financial situation remains solid, lower interest rates support net cash flow and rising housing prices counteract higher unemployment. If proven correct, private consumption will be heading for +0.7 % q/q in Q2, reducing the downside risk to the GDP-figure.
In Sweden the preliminary Q2 GDP is released. Q2 numbers are always relatively early because the government needs early input for its autumn budget calculations. Hence, forecasting is a bit more tricky. We look for 2.8% y/y calendar adjusted, which is sort of a compromise for what we get from our supply-side indicator (lower) and the somewhat more reliable demand-side indicator (higher). This is a tad higher than consensus and the Riksbank's forecast at 2.5%. Even if we are right it will not have any material impact on the Riksbank’s near-term policy but it could give a little boost to the bashed SEK.
In Denmark, we expect that the number of unemployed persons declined slightly in June due to higher employment. The unemployment rate was most likely unchanged at 4.8%. We expect industrial confidence to increase slightly to -6 in July from -9 in June as it has been inexplicably low in recent months compared to e.g. German Ifo expectations.
