While the data calendar for the first two days of the week was fairly thin, the rest of the week is packed with important events. The key event today is the July FOMC monetary policy meeting in the US. The meeting is a small one in the sense that we will not get new 'dots', revised projections or a press conference. As it is widely expected that the FOMC will keep the federal funds target range unchanged at 0.25-0.50%, focus will be on the released statement. Even though financial markets have taken Brexit calmly and the US equity markets are close to record highs, we expect the FOMC to take a cautious stance due to possible negative spill-over effects of Brexit uncertainties. Still, risk is tilted towards a more hawkish message given the strong rebound in US data in Q2, in our view (especially on the consumer side, cf. Selected Market News). For more details, see our FOMC Preview , 26 July.
In the euro area, the June figures for credit and money supply growth are due out. While there is more attention on credit developments in the Eurozone following the ECB's increased focus on the lending channel (e.g. introduction of TLRTO 2), the primary concern for the ECB is the economic and financial effect of Brexit on lending growth, which we will first get the initial indications of in next month's release. For today's release we expect an unchanged yearly growth rate in M3 of 4.9% and will look for verification that the reduction in the cost of borrowing for households and non-financial corporations has accelerated lending after the latest loss of momentum.
In terms of the Scandies, a bunch of figures are due out of Sweden. Consumer confidence has been stable for quite some time now. Since the middle of last year, consumers have become slightly more positive on the macro outlook but also slightly less upbeat on their own finances. Business sectors have shown only minor changes recently after much higher levels at the beginning of the year. Any impact of Brexit on Swedish business should show up in this data as they cover July. Moreover, any impact of the new amortisation requirement should show up in construction confidence. The latter also concerns the June household lending figures. Given there was a rush of applications in May, a recoil is on the cards. June trade balance is expected to show a sharp bounce back up to a SEK3-5bn surplus, following the seasonal pattern of the past few years.
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