- Bank of England consumer credit data may raise fears over UK economic recovery
- US Advance GDP reading in focus as growth continues to run hot
- German consumer confidence could hit 1 year highs
The week starts with Germany’s Ifo Business Climate reading for July. Expectations here are for further growth to be seen, helped in part by the continued roll out of the COVID vaccination program. A number close to three year highs of around 102.5 is forecast, up from last month’s 101.8 and by all accounts it would likely take a move lower to cause much concern for the market.
Tuesday sees the release of US Durable Goods Order data for June, with the number expected to ease back a little from the 2.3% seen in May. Again with the underlying strength we’ve seen in the US economy in recent months, the market is unlikely to be fazed by a modest deceleration here, so a print around 2% is unlikely to cause any real concern.
Back to Germany on Wednesday and we have the GfK Consumer Confidence reading for August due to be published. The forward looking quality of this number gives it added value to the market, but after the jump in recent readings, can the momentum be sustained. June’s print was -6.9 followed by -0.3 in July and that better than expected PMI data from Friday could provide added support here, too. An improvement on the last reading would certainly give the ECB cause for cheer.
Wednesday night sees the latest FOMC meeting on monetary policy. There’s still no expectation of any change in tack here, although further hints over tapering the asset purchase scheme may well be offered and policy hawks will be quick to reiterate the threat posed by those inflationary pressures which look far from being transitory.
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Thursday morning sees the release of the latest Bank of England Consumer Credit data for June, which is expected to tip back into negative territory. This does risk raising concerns that a consumer fuelled economic recovery may be looking less likely, although the lure of hospitality reopening, fine weather and England’s good run in the Euros may well have been distracting. The real challenge will be if we see this number continue to decline over the next few months, which would also arguably underline a broader lack of confidence amongst the population.
The Advance Q2 GDP figures from the US are also set for release on Thursday. Expectations are that the 6.4% printed in Q1 will be comprehensively eclipsed, with forecasts suggesting a number around two percentage points higher will be realised. The rhetoric from the Fed on Wednesday may give some advance indication as to just how hot this number is likely to be and anything much above 9% would likely renew those inflationary fears.
Rounding out the week on Friday we have Eurozone Q2 GDP readings, with modest quarterly growth expected. Suggestions are that a number around 1.5% will be seen, well clear of the -0.3% posted in Q1 so thereby avoiding the risk of a technical recession being called. Given the need for sustained growth across the Eurozone however, markets may react unkindly to anything that falls short of expectations.