Market movers today
Market focus will be on the development in Ukraine with particular attention to how Russias unilateral humanitarian aid convoy to Ukraine is handled.
In the euro area GDP figures for Q2 are released and we expect that the recovery has lost a bit of momentum. Yesterday's industrial production figures showed a decline for a second month in a row and we revised our GDP forecast down to 0.1% q/q from 0.2% q/q. Having said that, retail sales have increased during Q2 suggesting that private consumption continues to increase at a faster pace. This also reflects that domestic demand in Europe is still doing well. Note that the German, French and Portuguese figures are released ahead of the euro-area aggregate. For more on Portugal see our research paper published yesterday.
The ECB publishes its monthly report, which includes the Survey of Professional Forecasters where focus will mainly be on the longer-term inflation expectations. Since the latest survey was conducted inflation has been around 0.5% and the persistent low inflation could lead to a decline in inflation expectations. However, given that Draghi sounded balanced last week, when he knew the result, we do not expect a decline below 1.8% for the longer-term inflation expectations.
In the US the weekly claims data also deserve some attention. Currently initial unemployment claims are below 300k, suggesting that the labour market remains very strong.
To Read the Entire Report Please Click on the pdf File Below