Market movers today
Today’s most import ant event is the FOMC meeting, which is one of the big meetings with updated projections and a press conference. Very much against consensus, we expect the Fed to stay on hold, as a data-dependent FED should wait at least one meeting to confirm the recent weakness is only temporary but we admit that the Fed may have painted itself into the corner given the very high expectations of a hike. Instead, we expect a big announcement on how it will proceed with reducing its balance sheet (‘quantitative tightening’) and signalling a strong likelihood of a July hike. See more details here, "FOMC preview: Expectations are high but data do not justify a hike yet" , 12 June 2017.
In the US, the CPI inflation print for May is due out , which we estimate fell to 2.0% y/y form 2.2% y/y (core inflation was likely unchanged at 1.9%), so no help from the Fed here.
In the UK, look out for the labour market report due at 10:30 CET.
In Sweden, Prospera inflation expectations are due out .
In Norway, the very strong Regional Network Survey clearly indicates growth is higher than expected, see more Regional Network Survey: Norges Bank to remove rate cut probability, 13 June 2017.
Selected market news
Democratic law makers sue Trump. More than 190 Democrats in Congress sued US President Trump on Wednesday for profiting from business deals involving foreign governments without congressional consent , which would be in violation of US constitution. The suit involves the largest number of lawmakers ever to sue a US President , and is the latest in a series of legal efforts to get Trump to separate himself from his business interests. Other suits have been filed by private businesses and the at torneys general of Maryland and the District of Columbia.
Rising tensions in UK’s Brexit department . The Department for Exiting the EU has seen two of its four ministers depart this week, just days before the Brexit negotiations with the EU are due to start , reportedly reflecting rising tensions with Prime Minister May (see Financial Times). Separately, French President Macron told May during her visit in Paris that the door remains open for the UK to remain in the EU, but that it will become increasingly difficult to go backwards as negotiations go on. According to May, the timetable for negotiations ‘remains on course’.
Tech stock rebound lifts overall indices. The S&P tech sector rebounded 0.9% yesterday after taking large losses on Friday and also trading in negative territory on Monday. This helped propel the overall S&P 500 index to a gain of 0.5%.
Chinese industrial output and retail sales steady in May. Chinese economic data released overnight showed an increase in industrial production of 6.5% y/y in May, in line with the increase seen in April and slightly higher than the 6.4% expected. Retail sales were in line with expectations and April’s number at 10.7% y/y
