China's GDP, US unemployment and the European aid fund
The main event of yesterday in terms of macroeconomic statistics was the publication of data on China's GDP for the second quarter. The data came out significantly better than forecasted (+ 3.2% vs. analysts' expectations of 2.1%). Formally, the news is simply great and should have led to a surge of optimism in the stock market in China and the world in general. But by the end of yesterday, the key index of the Chinese stock market has lost almost 5%.
Yes, this can be attributed to weak data on retail sales in China. But it seems to us that the markets are just ripe for a correction. This is also supported by information from UBS that the bank's richest clients, who took huge loans in March to buy shares, are now actively fixing profits and planning to move from equities in favor of other assets.
The ECB, as expected, did not change the parameters of monetary policy yesterday. Nevertheless, the euro, which in the first half of the day faced serious difficulties after the announcement of the results of the ECB meeting, rose sharply, only to then decline again at the end of the day. However, the main news for the euro this week is the results of today's EU summit. If the aid fund of 750 billion euros will be approved, then the euro may well go above 1.15. Otherwise, the week will likely end below 1.13.
But let’s get back to yesterday. Data on retail sales and figures on jobless claims in the United States. Retail sales were a pleasant surprise (+ 7.5% m / m against the forecast of + 5.0% m / m), but the figures on jobless claims were rather mixed. In general, the situation in the labor market continues to be disgusting and the reopening of the economy has not yet radically changed it.
The steadily overwhelming number of people receiving unemployment benefits is now doubly dangerous, since there will be no additional checks of $ 600 per week since August. And if the government does not propose alternatives, the US economy may face very serious problems in this regard.
Yes, this can be attributed to weak data on retail sales in China. But it seems to us that the markets are just ripe for a correction. This is also supported by information from UBS that the bank's richest clients, who took huge loans in March to buy shares, are now actively fixing profits and planning to move from equities in favor of other assets.
The ECB, as expected, did not change the parameters of monetary policy yesterday. Nevertheless, the euro, which in the first half of the day faced serious difficulties after the announcement of the results of the ECB meeting, rose sharply, only to then decline again at the end of the day. However, the main news for the euro this week is the results of today's EU summit. If the aid fund of 750 billion euros will be approved, then the euro may well go above 1.15. Otherwise, the week will likely end below 1.13.
But let’s get back to yesterday. Data on retail sales and figures on jobless claims in the United States. Retail sales were a pleasant surprise (+ 7.5% m / m against the forecast of + 5.0% m / m), but the figures on jobless claims were rather mixed. In general, the situation in the labor market continues to be disgusting and the reopening of the economy has not yet radically changed it.
The steadily overwhelming number of people receiving unemployment benefits is now doubly dangerous, since there will be no additional checks of $ 600 per week since August. And if the government does not propose alternatives, the US economy may face very serious problems in this regard.
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