EU foreign ministers are meeting today to decide on further sanctions against Russia following the MH17 crash. In particular UK’s Cameron is pushing for additional sanctions. However, the ministers that are meeting today cannot approve ‘phase three’ sanctions, which include targeting entire sectors of the Russian economy. Such a move needs backing from the heads of state and government. Cameron and other hardliners are pushing for the foreign ministers to lay the groundwork, see more below and in Financial Times.
In the US focus is on inflation data and existing home sales. Core CPI has been edging upwards recently. We are expecting an increase of 0.2% m/m and 2.0% y/y, in line with consensus. Fed’s preferred inflation gauge, the core PCE, is also edging upwards although the level is still somewhat lower currently at 1.5% y/y. The lower level stems mainly from a lower weight on housing. With the US labour market strengthening, inflation data are set to have a bigger market interest and impact during H2.
Earnings season is peaking this week and Coca-Cola, Apple and Microsoft will report today. Both sales and earnings have in general been coming in a tad better than expected by analysts. This is supporting US equities that are hovering around an all-time high, despite the geopolitical tensions.
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