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Marketmind: U.K. data deluge and the run-up to recession

Published 07/13/2023, 12:33 AM
Updated 07/13/2023, 12:46 AM
© Reuters. Customers shop at a fruit and vegetable stall at Portobello Road in London, Britain, March 31, 2023. REUTERS/Toby Melville
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A look at the day ahead in European and global markets from Vidya Ranganathan

A big bunch of numbers is due out of Britain today - GDP, industrial output, construction - and will call into question the Bank of England's insistence that both the economy and its banks are coping okay with its fast and furious rate rises.

Despite 13 back-to-back rate rises, Britain remains a hawkish outlier among major economies, and the BOE's task of trying to tame the highest inflation rate in the rich world, while dealing with a super-tight labour market and policy transmission lags, isn't an easy one.

Both GDP and industrial output should have contracted in May from the previous month, leaving markets smug in their view that as policy rates head toward 6%, Britain is heading for a recession.

Gilt yields have come off slightly this week as the latest inflation numbers in a string of similarly softish U.S. data leads investors to believe the Fed will be done raising rates after July. Sterling is at 15-month highs.

Wall Street and other global stock markets are rejoicing and the dollar had its worst session in five months overnight, falling more than 1% against the euro to its lowest in more than a year.

The ECB releases June policy minutes, which may not be a spoiler, given how unambiguous policymakers have been about a rate rise this month, about ending crisis-era stimulus programmes and the inflation problem.

Nor is China affecting sentiment today, even after trade numbers missed estimates and showed how badly the reopened economy is stuttering.

Key developments that could influence markets on Thursday:

© Reuters. Customers shop at a fruit and vegetable stall at Portobello Road in London, Britain, March 31, 2023. REUTERS/Toby Melville

ECB June meeting minutes

UK May GDP estimates, industrial production, construction

 

 

 
 

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