Last week it was a mixed week both in terms of data and sentiment. Starting with the downside, Covid-19 concerns and Chinese tensions increased. There was a rise in Covid-19 cases in several countries last week. The US recorded a record high of close to 60k new cases a day, prompting some reversal of restriction easing. Latin American countries have also seen an escalation. In the UK, Leicester was put into lockdown again, as the rest of the nation reduced restrictions further. In the meantime, in the geopolitical arena China’s passed its Hong Kong national security law resulting in sanctions from the US, whilst the UK expressed it displeasure.

Despite the negatives, we saw risk sentiment increase. Signs of improving economic conditions were helped by positive reports about progress in developing a Covid-19 vaccine. The headline data release was the US labour data; the US gained 4.8 million jobs in June, far better 3 million expected. In addition, the unemployment rate fell from 13.3% to 11.1%. Central Bankers have also noted that so far, the economic rebound was proving to be stronger than forecast, this may have added to the more upbeat mood.

The UK/EU trade talks were slightly disappointing as discussions between the chief negotiators broke up a day earlier than expected; it is assumed they will resume in the coming week. However, supporting Sterling was Chancellor of the Exchequer Sunak’s update to the House of Commons regarding the economic outlook. PM Johnson said that the focus of policy will be on stimulating economic growth and that there would be no early return to austerity despite the escalation in the government’s budget deficit.

Looking to the week ahead, the US returns from its Independence Day holiday. The market will be focusing on whether we see a bounce in activity as non-essential retailers and various service providers re-open. However, a key question is whether consumers will have the confidence to immediately start using leisure services. In the meantime, the focus for the UK is likely to be on Chancellor of the Exchequer Sunak’s update to the House of Commons regarding the economic outlook.

Today

  • UK Halifax house price index
  • US JOLTS job opening

UK house prices are come again coming under scrutiny with the overhanging uncertainty in the economy. House prices are expected to have fallen for the third consecutive month in a row. Following the 4M job rebound on Thursday last week for the US, the market will look to see if the job openings data will help reinforce the sent.

Tuesday

  • EU Economic Forecasts
  • Chancellor of the Exchequer Sunak’s update

UK house prices are come again coming under scrutiny with the overhanging uncertainty in the economy. House prices are expected to have fallen for the third consecutive month in a row. Following the 4M job rebound on Thursday last week for the US, the market will look to see if the job openings data will help reinforce the sent.

Wednesday

  • EU Economic Forecasts
  • Chancellor of the Exchequer Sunak’s update

The EU economic forecast will be watched for positive signs as the recovery appears to be better than expected. This report includes economic forecasts for EU member states over the next 2 years. Sunak will address the House of Commons. There is speculation that the Chancellor will announce measures to boost growth.

Thursday

  • US weekly jobless claims

Whilst we are seeing a recovery in the labour markets and the jobless claims has declined from its peak, the figure remains elevated. The market will continue to focus on this figure to see how strong the rebound in the labour markets has been especially with some states locking down once again.

Friday

  • US PPI

Factory level inflation will be released at the end of the week. Factory level inflation can be seen as a gauge for how future inflation could look as producer may have the pressures of passing on the cost. The figure is expected to be anaemic at 0.1% but back into positive territory.

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