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Market insight 21.06.2018

SNB, BoE and BCB meetings: no change

SNB, BoE and BCB meetings: no change

US: Philadelphia Fed. (June): 19.9 vs 29.0 expected (prior: 34.4)

  • The index fell sharply to its lowest level since November 2016 but remains well above long-term average.
  • The escalation of trade tensions with China probably weighed on sentiment.
  • On the positive side, 58% of firms expect the pace of growth in production to accelerate in Q3 from Q2 and corporates increased their future capex plans.

US: House price Index MoM (FHFA) (April): 0.1% m/m vs 0.5% expected (prior: 0.2% revised from 0.1%)

  • The y/y increase edged lower to 6.4% from 6.7%.

US: Initial jobless claims (June 16th): 218k vs 220k expected (prior: 221k revised from 218k)

  • Down to a six-week low.

 

Eurozone: Consumer confidence (June A.): -0.5 vs 0.0 expected (prior: 0.2)

  • Slight decline to a 7-month low as households may have become a bit more pessimistic given the rise in inflation, signs of a modest slowdown in economic growth, and escalating trade tensions.
  • Despite this month's weakness, consumer confidence remains close to all-time highs.

 

France: Business confidence (June): 106 as expected (prior: 106)

  • Manufacturing confidence: 110 vs 108 expected (prior: 110 revised from 109)
  • Unchanged from May.

 

Switzerland: SNB: no change, as widely expected

  • The press release was little changed. The policy makers continue to characterize the CHF as highly valued and the situation on the currency market as fragile. Uncertainties in Italy were mentionned.
  • The new inflation forecasts show an upward revision of the 2018 forecast to 0.9% (up from 0.6%) reflecting higher oil prices. The 2019 forecast was unchanged at 0.9% while the 2020 forecast has been lowered to 1.6% (from 1.9%), reflecting a "muted outlook in the euro" area according to the SNB.
  • The SNB left its real GDP forecast unchanged at "around 2%".
  • President Jordan remained cautious overall, noting that policy normalization had not been discussed, that uncertainty had increased and the lower medium-term inflation forecasts.

 

UK: BoE: no change, as expected

  • The surprise was the 6:3 split on rates, with Andy Haldane (the chief economist) joining the dissenters.
  • The statement highlights the view that the MPC is confident that soft data in Q1 is likely to be temporary and that the economy will pick up over time. Moreover, the MPC sees evidence of growing cost pressures in the labour market.
  • A rate hike in August has become more likely (roughly 70% according to market expectations post meeting, vs 50% before).

 

Brazil: central bank kept the Selic rate unchanged at 6.50% (yesterday evening), as widely expected

  • The BCB's statement showed that the policy makers do not see any urgency to move on the rate front, despite the bank's upward revisions to inflation forecasts. The BCB reiterated that the "economic conditions prescribe accommodative monetary policy, i.e. interest rates below the structural level".

 


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