Written Commentary
- Light schedule of second, third tier data, leaves focus on digesting India Budget ahead of raft of US corporate earnings, headlined by Alphabet and Tesla; rate decisions in Hungary, Nigeria & Turkey; UK I-L 15-yr, German and US 2-yr
- US Existing Home Sales: further fall expected on rates and affordability headwinds; focus on pace of increase in unsold inventories
- Turkey rates: no change in key policy rate, but other measures likely to tighten liquidity
EVENTS PREVIEW
What looks to be a very light schedule has plenty to contemplate, with the Alphabet and Tesla earnings likely getting pride of place. Statistically US Existing Home Sales and Eurozone Consumer Confidence are the only items of note, but there are the Indian Budget (which maintained infrastructure spending, and focussed on job creation and rural development, as well as raising capital gains tax), rate decisions in Hungary, Nigeria and Turkey, a speech by ECB’s Lane and plenty of other significant corporate earnings.
In Europe, highlights are likely to include Akzo Nobel, Chocoladefabriken Lindt & Spruengli, Enagas, Kuehne + Nagel, Norsk Hydro, Randstad, Spotify & Temenos, while the US also looks to Coca-Cola, Comcast, Freeport-McMoRan, General Electric, General Motors, Lockheed Martin, Paccar, PulteGroup, Seagate Technology, UPS & Visa. Govt bond supply takes the form of UK 15-yr I-L, German and US 2-yr.
US Democrats have rapidly closed ranks behind Harris as their nominee for president, so markets will probably be happy to put this to one side, keep a watch on opinion polls, and turn their attention back to the run of corporate earnings and the Fed policy outlook. That said, the Democrats will need to avoid perceptions of railroading Harris’ nomination, above all given the already deeply partisan divisions, and some of the seemingly endless false claims about undemocratic processes. Be that as it may, a close eye will also be kept on today’s API Oil Inventories ahead of the official data tomorrow, as crude prices attempt to find a floor after the rout over the past couple of days, in no small part due to concerns about Chinese demand, but also as evidence mounts that the post-Covid travel boom is over (as per the example of Ryanair’s results yesterday).
** U.S.A. – June Existing Home Sales **
– Existing Home Sales are expected to fall -3.0% m/m (following May’s -0.7%), which would fit well with expectations that Residential Investment will be a substantial drag on Q2 GDP, due Thursday. A close eye needs to be kept on inventories of unsold homes, which remained still quite low at 3.7 months in May, but jumped from just 2.9 in February, and marked the highest level since June 2020.
** Central Banks **
– Turkey’s TCMB is expected to hold rates once again at 50.0%, continue to warn of ‘high for longer’ rates, and further non-rate measures to tighten liquidity, with a reserve requirement hike seen likely, perhaps accompanied by a hike in the lower band of its rate corridor. Nigeria’s CBN is expected to hike rates a further 75 bps to 27.0% following June’s higher than expected 34.2% y/y CPI print, which it is hoping will be the peak, as benign base effects kick in during H2.
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