Focus on the FOMC minutes ahead of the Federal Reserve conference in Jackson Hole

Market movers today

• The main data release today is the FOMC minutes from the July meeting, which we get tonight. A lot has happened since the last meeting so the minutes may seem hawkish in the current context.

• Today, PM Boris Johnson is meeting with German chancellor Angela Merkel to, among other things, discuss Brexit. In his letter Monday, Johnson made it clear that the backstop needs to be removed for the withdrawal deal to pass the House of Commons but the EU has repeatedly rejected this, as it sees it as a necessary insurance policy to avoid a hard border. The swift refusal yesterday led to a depreciation of GBP.

• In Scandi, we get Norwegian unemployment and Danish employment figures. The Danish figures will reveal whether the latest slowdown in employment growth is due to the economy reaching full employment or due to the global slowdown beginning to take its toll on the Danish economy.

Selected market news

It has been a mixed session in the Asian equity markets this morning, while we wait for more clarity on a number of political events such as the trade war between the US and China, Brexit and the recent political uncertainty in Italy. On top of this we have the global monetary outlook where central banks are expected to ease.

US Treasuries rallied modestly yesterday as US equities declined, but we are still some 5-6bp above the lows seen earlier in August.

Yesterday, Italian PM Conte resigned on the back of Vice PM Salvini calling for a vote of confidence on the government. Italian government bonds rallied as the market expects a new coalition of a more pro-business and pro-EU government. However, it is now in the hands of the Italian President to explore the possibility of a new government or whether to call for a general election.

US President Trump continues to call for more rate cuts and thus there will be focus on the FOMC minutes tonight and Fed President Powell's speech at the conference in Jackson Hole on Friday. President Trump has cancelled his trip to Denmark as the Danish PM Frederiksen refused to sell Greenland. 

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