DCSIMG

Sweden: Inventories point to GDP revisions

Today’s figures for inventories support the view that Q2 GDP will be revised down, but perhaps somewhat less than we had expected.

Inventories in manufacturing industry will weigh on GDP growth by around 0.5% points y/y according to our calculations. This should be compared to the total inventory effect of -0.1% point included in the Q2 GDP. We had expected inventories in manufacturing industry to shave off almost 1% of GDP y/y.

Service sector production was weak in June, and although production in the manufacturing industry surprised on the upside in June, it is still much weaker than the Q2 GDP reading. Other pieces in the puzzle ahead of the revised Q2 GDP (due Sep. 14) are revised trade balance (Aug. 28), foreign trade with services (Aug. 30) and inventories in the retail and wholesale sectors (Sep. 6). All in all, we deem Q2 GDP to be revised down substantially.

Elsewhere, figures showed that capacity utilization in the manufacturing industry stayed flat in Q2, both q/q and y/y. This is in contrast to the marked downturn in resource utilization according to NIER’s tendency survey.

Keywords

, ,

Latest research

US: Core consumer prices rise less than expected

The overall trend of inflation remained subdued in June

Euro Rates Update

The latest Euro Rates Update is now available

Morning Briefing - Tuesday July 22

Japanese government cuts GDP forecast Pro-Russian separatists hand over black boxes to Malaysia

FI Eye-Opener: Searching for inflation

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.

Morning Briefing - Monday July 21

Growing pressure for further sanctions against Russia Israel steps up ground offensive in Gaza

While you were busy...

If you are just back from holiday, here are a few bullets on what happened while you were busy…

Euro Rates Update

The latest Euro Rates Update is now available

FI Eye-Opener: Markets too upbeat on Europe?

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.

FX: the EUR trap

Is Europe next Japan? Hopefully not. ECB and releveraging implications for EUR.

Week Ahead: 19 - 25 July 2014

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

Swedish Morning Briefing - Friday 18 July

Passenger plane downed over eastern Ukraine Israel launches ground offensive in Gaza

FI Eye-Opener: Increasing tensions to push German yields to new lows

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: Two bank runs and a bankruptcy

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!

Bonds: This bubble will keep growing

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.

Turkey: 50 bp cut this time

A 50 bp rate cut this time. More could come if risk sentiment remains decent and the TRY does not weaken further.

RUB: again under pressure after US and EU sanctions

RUB is again under pressure after US imposed sanctions on Russian companies.

Swedish Morning Briefing - Thursday 17 July

No new foreign policy chief after EU summit US and EU boost sanctions against Russia

FI Eye-Opener: Another round of sanctions

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.

Sweden: Riksbank’s minutes soft as expected

Today’s minutes did not add much new information regarding the reasons for the rate decision. As indicated by the rate path, the discussion confirmed that 0.25 is not a floor for the repo rate.

China: Growth momentum picks up

Chinese GDP numbers were slightly better than expected at 7.5% y/y in Q2 (Nordea: 7.4%; consensus: 7.4%; previous: 7.4%). The batch of monthly numbers - investment, industrial output and retail sales - were also released this morning. Most were fairly close to expectations or slightly better. We could see slightly better numbers out of China in the coming months, but seen in a longer perspective, we still believe the Chinese economy is slowing and rebalancing gradually.