Riksbank Decision in Focus as Origo Expectations Tick Up
One-year Origo expectations have edged higher but remain low ahead of Thursday's Riksbank decision. EUR/SEK above 11.00 as US retail sales miss shapes rate path.
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Sweden's Origo inflation expectations land this morning, three days before the Riksbank rate decision on Thursday. One-year expectations have ticked higher. They remain at low levels. Five-year expectations have held around or just above the 2% target.
The data arrives as markets price roughly 32 basis points of Fed hikes over the coming year, less than the 50bp many economists expect. EUR/SEK lingers just above 11.00, extending its Friday drift. The dollar softened broadly after the July retail control group print fell 0.4% month on month. Consensus forecasts had called for a 0.3% gain. Lower gasoline prices and weak online shopping weighed on the headline. Auto sales also tapered. Restaurants, clothing, furniture, and general merchandise held steadier.
Fed’s Goolsbee told reporters he was encouraged by recent CPI reports. He supported holding rates unchanged in July. He downplayed the retail sales miss as a single month. Persistent weakness in consumer spending or productivity would become concerning, he said.
The Riksbank decision Thursday caps a busy week. Wednesday brings UK July CPI and the FOMC minutes. Thursday also carries the ECB minutes. Friday rounds out with preliminary August PMIs for the major economies and Japan's July nationwide CPI. Euro area PMIs carry extra weight after July's strong print. The second estimate confirmed Q2 GDP growth at 0.4% quarter on quarter, with annual growth at 1.0% year on year. Employment rose 0.1% quarter on quarter in Q2, matching Q1's pace.
In Japan, preliminary Q2 GDP came in at 0.3% quarter on quarter, below the 0.5% consensus. Private consumption was flat. Capital expenditure declined. External demand carried the print. The data matters for the Bank of Japan's rate path. Solid growth remains a precondition for further hikes. The weak domestic-demand details complicate the growth assessment.
China's National Bureau of Statistics delayed July activity and house price data to 3 p.m. local time from the usual morning release. No reason was given.
Equities took a breather Friday after fresh all-time highs in Europe and the US earlier in the week. The S&P 500 and Stoxx 600 each fell 0.2%. Tech stocks slipped, both semiconductors and software, alongside health care. It was not a risk-off session. Materials and industrials traded higher. Asian markets rose this morning, with Shanghai and Shenzhen up 1%. US futures pointed slightly higher.
Brent crude traded above $88 a barrel Monday morning as Middle East tensions kept supply risk in focus. Israel struck Lebanon over the weekend. The US is preparing new sanctions on Iran. The interim US-Iran ceasefire expires today. Talks to reopen the Strait of Hormuz show little progress. Crude shipments by Middle East producers continued through the waterway. Iran-Oman talks appear to be advancing without US participation.
The NOK strengthened overnight. Euro area PMIs on Friday will test whether July's strong manufacturing and services prints were a one-off or the start of a trend.
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