Norway: GDP in line with Norges Bank
It is service production outside the retail sector which pulls up, contributing 0.4% points. But also construction, manufacturing and public sector production grew at a healthy pace in Q4. Electricity pulled down as expected.
Mainland domestic demand grew more than we had expected (1,2% q/q excluding inventories) . This could indicate that the effect of the international and financial unrest on the economy will be less than one could have feared. But of course export will be hurt and was weak in Q4.
Excluding electricity production, growth was 0.8%. That is in line with Norges Banks forecast. Norges Bank will conclude that capacity utilization is about as expected, if anything on the strong side since unemployment is somewhat lower than forecasted. We are more certain that rates will be on hold.
BoE minutes showed a unanimous monetary policy decision at the July meeting, but the differing views about the outlook are starting to emerge. The modest wage pressures mean that the Bank is not in any hurry to start to raise rates, and the first rate hike is not around the corner. The August monetary policy meeting and the inflation report will be interesting.
EU to limit Russian access to capital markets Minutes of BoE meeting due at 10.30
The latest Euro Rates Update is now available
German yields rebound – US Treasuries end with a small rally. Core bond to remain supported today. Equities with clear gains. EU continues to advance with small steps with Russian sanctions. US inflation pressures remain limited for now. At least some easing in the Euro-zone deflation threat. New 30-year benchmark from the EFSF. BoE minutes and French business confidence ahead.
The overall trend of inflation remained subdued in June
Japanese government cuts GDP forecast Pro-Russian separatists hand over black boxes to Malaysia
Core bond yields edge further down – geopolitical tensions continue to support bonds. Equity markets feeling pressure. More sanctions on Russia in the pipeline. US inflation pressures finally picking up? Belgium to sell longer bonds.
Growing pressure for further sanctions against Russia Israel steps up ground offensive in Gaza
If you are just back from holiday, here are a few bullets on what happened while you were busy…
Bond yields end a bit higher, but near-term upside still limited. US equities with a clear rebound – resistance in sight. Money market rates rise on higher LTRO repayments. More warnings on markets being too optimistic. US inflation numbers and Euro-zone PMIs ahead. Supply action easing – more coupon and redemption payments ahead.
Is Europe next Japan? Hopefully not. ECB and releveraging implications for EUR.
US CPI inflation will be out on Tuesday . China and the Euro-zone will present PMI figures. On Friday the German Ifo indexes is released. The BoE will deliver minutes from the July meeting and UK GDP figures will be out on Friday
Passenger plane downed over eastern Ukraine Israel launches ground offensive in Gaza
Bonds continue to rally – yields in several semi-core countries hit record lows. Equities suffer a beating. Chinese home prices continue to fall. Geopolitical concerns take centre stage ahead of the weekend. German 10-year yield about to fall to new lows. Mixed US data – Bullard sees early rate hikes. No ABS purchases from the ECB for a long while. US consumer confidence and euro debate ahead.
Bulgaria experienced a run on two of its biggest banks in late June, leading the central bank to close the fourth-largest bank in early July and start criminal investigations against several people. Moreover, the bank runs may have been the final push for the government to call early elections and have pushed the country into talks with the ECB to take over supervision of its banks and with the EBA to review the central bank’s banking supervision. Banking sector risks are obviously elevated!
It seems everywhere you look nowadays, you see a bubble. That is not true of course, but based on many headlines, you could be fooled. The bond market is no exception, and it has received its fair share of bubble talk. If it is a bubble, it will keep growing in the near future.
A 50 bp rate cut this time. More could come if risk sentiment remains decent and the TRY does not weaken further.
RUB is again under pressure after US imposed sanctions on Russian companies.
No new foreign policy chief after EU summit US and EU boost sanctions against Russia
Bonds continue to see strong demand. Portuguese bonds rally hard. Core bonds to continue to perform today. European equities with considerable gains yesterday. Fresh sanctions on Russia taking a toll on already weak economies. EU leaders fail to agree on top posts. Final Euro-zone inflation and US construction data ahead. Spanish and French supply.
Piotr Bujak @pbujak Jul 23
@mbank_research We should not draw too far-reaching conclusions from data for a single month or even quarter.
Piotr Bujak @pbujak Jul 23
@mbank_research Actually wage growth in mining accelerated, so it was not a part of negative surprise in total wages at all.
@cborjesson agree; 1 dimension is standard of living, but also important 2 – population age @izakaminska @grodaeu
@izakaminska @grodaeu +1