Bond yields still at rock bottom. Japanese GDP down in line with expectations. US retail sales today. Bond supply from Germany and US.
Germans are said to be truly happy only when they are slightly unhappy. Financial analysts at least are increasingly worried and sent ZEW expectations down more than expected. Growth worries kept bond yields extremely low and the euro fell 0.3% against the dollar to USD 1.3339, close to the nine-month low it touched last week. German 10-year bond yields edged lower to 1.05% and periphery spreads generally declined a few basis points. 10-year Treasury yields rose 2bp to 2.45% ahead of big auctions today and tomorrow.
The Euro Stoxx50 ended the day 0.8% lower, German equities underperformed. So Monday’s rise in equities was just a one-day wonder as it seems.
News from China and Japan
Weak lending data weighed on Chinese equities, but retail sales (12.2% y/y) and industrial production (+9% y/y) came in broadly as expected. Japan’s GDP fell by 1.7% over the quarter, in line with expectations and driven by a 5% drop in private consumption after the tax hike in April.
Today’s data
Watch out for US retail sales today. For the so-called control sales, we expect an increase of 0.4% m/m, indicating a good start for consumption into Q3. Eurostat will publish industrial production numbers for the Euro area. From France, we will get July inflation, and Greece is expected to publish Q2 GDP. From the Bank of England’s inflation report, we expect only minor revisions of forecasts.
Bond supply
Germany is scheduled to sell EUR 4 bn in 10-year bonds today. Also the The US will be in the market with 10-year notes (USD 24bn).
Nordea