Danske Daily: Focus On Danish Retail Sales Numbers

In terms of data releases we have a relatively thin calendar. ECB will announce the weekly repayment of the 3Y LTRO, which is likely to attract attention after excess liquidity has dropped to below EUR250bn. Money market fixings have been moving upwards although the trend in the weekly LTRO repayment has been decreasing and is currently below EUR3bn.

The main release in the US will be the final University of Michigan confidence data. The leading indicator jumped in May and has since been broadly flat. The improving housing market is a supportive factor while sequester concerns do not seem to have impacted the overall economy as negatively as feared.

Scandi markets today
The main release in the Scandi sphere will be the Danish securities statistics. EUR/DKK moved up and touched the central rate in June. Today’s release of June’s securities statistics and foreign portfolio investment figures will show if the move can be explained by an outflow of Danish assets in June. However, in any case DKK was not under pressure in June, since June’s FX reserve figures showed that Danmarks Nationalbank did not have to intervene to support DKK. Danish retail sales numbers are also worth keeping an eye on today. In Sweden the main release will be the trade balance data.

Selected market news
It has been a calm session overnight. In the US both equities and Treasuries edged slightly higher after good performance. US stocks were supported by stronger-than-expected durable goods orders for June, suggesting that business investment will pick up speed in H2. Total orders rose 4.2% m/m and was revised higher to 5.2% m/m (previous 3.6% m/m). If the strong pattern in US data continues it seems increasingly likely that the Fed will start tapering in September.

Bloomberg writes that China has ordered more than 1,400 companies to reduce excess production capacity this year. The leadership in China has communicated that is will restructure the economy to achieve a more sustainable growth. In Asia stock indices are mixed this morning with Nikkei down 2.5% and Hang Seng broadly unchanged. Overnight both JPY and EUR have strengthened versus USD.

In the euro area core rates continued to move higher yesterday. In the semi-core segment Belgium tightened versus Bunds. In the periphery Portugal was the top performer in the short end while Spain tightened around 5bp in the long end.

In Japan inflation data released overnight showed that CPI (ex fresh food) increased 0.4% y/y in June, thereby continuing the upward pattern. It appears that Japan is finally escaping deflation after more than a decade with decreasing prices. However, there is still far to go before Shinzo Abe has reached the goal of 2% inflation, see Bloomberg.

Note also that today it is exactly one year ago that ECB president Draghi delivered his famous ‘Whatever it takes’-speech. Since then 2Y yields in Spain and Italy have dropped from 6.4% and 4.9% to currently 1.9% and 1.6%, respectively.

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