'Bye Biden' are the headlines in the press whilst the financial media reference Chinese banks cutting their main benchmark lending rate for the first time since August 2023, encouraging economic growth following the PBOC’s rate reduction. The one-year loan prime rate was reduced to 3.35% from 3.45%, according to a statement by the People’s Bank of China on Monday. The five-year rate, a reference for mortgages, was lowered to 3.85% from 3.95%. What else will be of interest this week? We have US Inflation, European bank earnings and PMIs which will put European Central Bank rate cuts more sharply into focus. At the moment markets have a cut from the Fed, ECB and BoE priced in for September.
Data wise we have U.S. inflation data on Friday, Economists are expecting June's personal consumption expenditures (PCE) price index to have climbed 0.1% for the second straight month, which would bring three-month annualized core inflation down to the slowest pace this year, below the Fed’s 2% target. The CPI fell in June for the first time in four years. As for equity markets overnight we have seen further losses in Asia, the Nikkei is down 1.32% whilst the CSI is -1.15%. There will be keen interest in Tesla that report Tuesday and Alphabet kicking off results from the "Magnificent Seven”. IBM, Ford and General Motors are among some of the other big-name companies set to report during the coming week. Whilst in Europe, Wednesday sees earnings reports from Deutsche Bank, Lloyds Banking Group BNP Paribas, Banco Santander, and UniCredit, which will put the banking sector in the spotlight.
The main mover overnight is Bitcoin climbing to $67,800, West Texas Intermediate crude rose 0.6% to $80.61 a barrel and Spot gold rose 0.2% to $2,404.93 an ounce. As for today we are data light with EU foreign ministers meeting in Brussels, however it will be a busy week with the Paris Olympics starting on Friday.
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