The European Central Bank’s rate decision and Mario Draghi’s press conference are moving closer as is the US Employment report, but before these two major events we have a few European ones to keep us awake on this otherwise rather quite day, due to the US celebrating Independence Day.
Sweden’s Riksbank to keep rates unchanged (07:30): The Swedish economy has done remarkably well since the global recession with growth peaking at 7.6% y/y in late 2010. Since then growth has slowly but surely decelerated as slower global trade growth pressures manufacturers. This caused the Riksbank to lower its main interest rate by 50 basis points earlier this year to 1.5%. Since then data has been so-so with Q2 looking weaker than Q1, but the stronger than expected Q1 GDP growth and outlook for some improvement should be enough to keep the rate unchanged today (5 out of 20 analysts in a Bloomberg survey expect a 25bps cut, while the rest look for unchanged rates.)
Jun. UK PMI Services (08:30) to inch lower? The service sector has held up quite well in the UK in the first half of the year according to the PMI report unlike the weak GDP report for Q1 (-0.3% q/q) and expected weak Q2 report (+0.1%). However, part of the weakness in the Q1 GDP report is due to foreign trade with exporters recording a 1.7% decrease q/q. Consensus expects Services PMI to inch lower by 0.4 points to 52.9 in June.
May Eurozone Retail Sales (09:00) flat? Given the horrible Retail PMI of 43.3 for May it is a bit surprising that consensus expects a flat reading for Retail Sales though the answer may simply be that April’s ugly -1.4% m/m print will see some upside pressure simply due to mean reversion. Since May the Retail PMI for the Eurozone has moved higher to 48.3 suggesting thate Q2 will indeed be the weakest quarter this year (which we expect). Consensus expects Retail Sales to read 0% m/m (-1% y/y) in May after April’s -1.4% (-3.4%).
Mads Koefoed,
SAXO BANK