Good Morning: The Long & the Short of it and The Bigger Picture - 29 June 2020 - ADM ISI
- Busy schedule of data likely to fall under the wheels of pandemic news,
quarter end and rash of central bank speakers and political meetings;
Japan Retail Sales, Vietnam Q2 GDP, Spain CPI to digest, awaiting UK
credit aggregates, EC Confidence surveys, German CPI & US Pending Home
Sales & Dallas Fed Manufacturing; Merkel interview also to be digested
- UK Consumer Credit: further smaller fall expected, auto lending a key
drag, but also tight credit conditions and ltd retail activity
- EC Confidence surveys: rebound expected, but still signalling sharp
contraction in activity
- US Pending Home Sales: expected to rebound sharply, but renewed surge
in Covid-19 infection rates likely to restrain in coming months
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** EVENTS PREVIEW **
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There is a reasonably busy run of data to start the week, though with quarter end looming tomorrow, it may well be little more than statistical roadkill, subordinated to month end flows, a busy run of ECB, BOE & Fed speakers and continued concerns about the resurgence in Coronavirus infection rates in the US, Brazil & India. There are Japan's Retail Sales (weaker than expected), Vietnam's Q2 GDP (sharp slowdown, but still eking out marginal growth)and run of monthly activity data, Thai Manufacturing Output and Spanish provisional CPI to digest, while ahead lie UK monetary & credit aggregates, Eurozone EC Confidence surveys, German provisional CPI, US Pending Home Sales and the Dallas Fed Manufacturing survey. On the political front, the latest round of UK/EU Brexit talks gets under way, with still few signs of a breakthrough and following Merkel's weekend comments suggesting that Germany is unlikely to be in a mood for making concessions in these talks
https://www.theguardian.com/world/2...needs-survive-angela-merkel-interview-in-full , and that Germany is far more focused on enduring that an agreement on the EU recovery fund, which will be the subject of talks between her and Macron today. On the policy front, the day's BoE's speakers will perhaps get more attention than others, given the somewhat confusing policy signalling in recent weeks.
In terms of the run of data, the rebound in energy prices is likely to be the main driver of expected 0.4% m/m gains in Spanish and German HICP, though with y/y rates at -0.5% and +0.6% respectively, both 0.1 ppts above May levels, inflation remains well below the ECB's target, and as with most developed economies inflation is well down the list of central bank priorities, which remain focused on financial stability, growth and employment. Eurozone confidence measures are expected to echo the provisional Consumer Confidence reading, and rebound quite sharply, but still remain deep in contraction territory. UK Consumer Credit is seen falling again, down £3.0 Bln following April's £-7.4 Bln, with continued weakness in auto sales a key factor, though even stripping out lending, it will post a contraction, both a reflection of limited retail activity and tight consumer lending conditions, with the Mortgage Lending data seen posting a very small 25K rise in Approvals and a £1.0 Bln drop in Net Lending. US May Pending Home Sales are likewise seen reprising the sharp rebounds seen in other monthly activity data, posting a 19.9% m/m bounce, though the latest round of moves to contain the very rapid spread of the virus in more than half of the US states suggests that there will likely be setbacks in July, if not June data.
========================== ** THE DAY AHEAD ** ===========================
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