Today is definitely the real start to the economic week with yesterday an ideal opportunity for those of us not away from the office to catch up on reading and research whilst keeping 1¾ eyes on the cricket from Durham.
Following last week’s re-engineering of monetary policy in the UK courtesy of the Bank of England’s forward guidance plan, inflation and unemployment data are only going to become more important to the market performance of UK assets. Today we see how the inflationary caveat is doing; price data from producers (PPI) and the two consumer basket indicators (CPI and RPI) are all due at 0930. A dip in inflation is forecast on the key CPI indicator (2.8% to 2.7%) and should allow for some sterling softness as markets move further away from ‘knock out’ levels of price increases.
One area where price increases are forecast to remain is the UK housing market. The government’s ‘Help to Buy’ plan at the moment allows help for buyers of new property – something that will inflate prices but alongside a subsequent increase in supply of housing stock. Next year’s extension to this plan removes the need for the purchase of a new house. Simple supply and demand rules show that prices will only become more unstable in the coming few years – a bubble of housing again for the UK.
News from the Eurozone yesterday was also quiet with Greece’s GDP for Q2 (-4.6% yoy) adding intrigue to a story published in Germany over the weekend about the possibility of another Greek bailout. According to a report by the Bundesbank, Greece will have to apply for another bailout by the beginning of 2014 at the latest. This comes 5 weeks before the German election and is most certainly something that the Merkel campaign didn’t want flaring up in the run-up to voters making their decision.
Germany will be in the spotlight with the publication of the latest ZEW business sentiment indicators at 1000 BST. The market is looking for an improvement to a 5 month high.
The view of the USD is one of data vs tapering; does the US deserve it? US retail sales is due this afternoon and we are looking for a strong number. Consumer confidence has increased through the first half of the year and recent jobs numbers have seen a proportionally higher increase in retail employment than elsewhere; classic signs of an improving sector and sales. USD fought back from the lows yesterday on a hint of profit taking and technical trading and a strong figure should give it a further shot in the arm.
The greenback has strengthened overnight following a paper from the San Francisco Fed that some have taken as a ringing endorsement of asset purchase tapering sooner rather than later. The Federal Reserve meeting in September that could see a reduction in asset purchases is in the 3rd week of September, the same as the German election and a number of significant option expiries. Quite a period for volatility you would think.
Following last week’s re-engineering of monetary policy in the UK courtesy of the Bank of England’s forward guidance plan, inflation and unemployment data are only going to become more important to the market performance of UK assets. Today we see how the inflationary caveat is doing; price data from producers (PPI) and the two consumer basket indicators (CPI and RPI) are all due at 0930. A dip in inflation is forecast on the key CPI indicator (2.8% to 2.7%) and should allow for some sterling softness as markets move further away from ‘knock out’ levels of price increases.
One area where price increases are forecast to remain is the UK housing market. The government’s ‘Help to Buy’ plan at the moment allows help for buyers of new property – something that will inflate prices but alongside a subsequent increase in supply of housing stock. Next year’s extension to this plan removes the need for the purchase of a new house. Simple supply and demand rules show that prices will only become more unstable in the coming few years – a bubble of housing again for the UK.
News from the Eurozone yesterday was also quiet with Greece’s GDP for Q2 (-4.6% yoy) adding intrigue to a story published in Germany over the weekend about the possibility of another Greek bailout. According to a report by the Bundesbank, Greece will have to apply for another bailout by the beginning of 2014 at the latest. This comes 5 weeks before the German election and is most certainly something that the Merkel campaign didn’t want flaring up in the run-up to voters making their decision.
Germany will be in the spotlight with the publication of the latest ZEW business sentiment indicators at 1000 BST. The market is looking for an improvement to a 5 month high.
The view of the USD is one of data vs tapering; does the US deserve it? US retail sales is due this afternoon and we are looking for a strong number. Consumer confidence has increased through the first half of the year and recent jobs numbers have seen a proportionally higher increase in retail employment than elsewhere; classic signs of an improving sector and sales. USD fought back from the lows yesterday on a hint of profit taking and technical trading and a strong figure should give it a further shot in the arm.
The greenback has strengthened overnight following a paper from the San Francisco Fed that some have taken as a ringing endorsement of asset purchase tapering sooner rather than later. The Federal Reserve meeting in September that could see a reduction in asset purchases is in the 3rd week of September, the same as the German election and a number of significant option expiries. Quite a period for volatility you would think.