Spotlight on US consumer sentiment

In focus today

• Today's schedule is light in terms of data releases.

• In the US we get the Conference Board Consumer Confidence numbers for June at 16.00 CEST. A Reuters poll has consensus expecting 100.0, slightly down from 102.0 in May.

• In Sweden, May PPI is released at 08.00 CEST. Its development has been normalized over many months now. However, frontloaded import inflation has begun to moderately pick up pace and is now slightly above its historical mean. Thus, Sweden is no longer importing a deflationary pressure.

• FOMC members Bowman and Cook (both voting members) give speeches today. Bowman speaks at both 13.00 and 20.10 CEST and Cook at 18.00 CEST.

Economic and market news

What happened overnight

In Japan, the Chief Cabinet Secretary Yoshimasa Hayashi said that authorities would respond appropriately to excess FX volatility. The top governmental spokesperson emphasised that currency volatility was negatively affecting both households and businesses, as such following the lines of Japanese Finance Minister Shunichi Suzuki, who had said earlier that currency rates 'need to be stable', and that authorities would respond 'appropriately to excessive currency moves'. The Japanese yen has been nearing 160 against the US dollar (USDJPY), and trades around 159.4 as of this morning. When the USDJPY hit a 34-year trough of 160.245 earlier this year it triggered interventions by authorities in late April and early May of USD61.33bn.

In the US, president of the San Fransisco Fed, Mary Daly, said the Fed need not only worry about inflation as rising unemployment was increasingly becoming a risk. Daly said inflation still posed a risk, and the Fed would hence need to keep monetary policy strict to dampen demand. However, she said in doing so, it would need to exhibit care so as not to risk it translating into too high unemployment.

What happened yesterday

In Germany, the Ifo declined in line with Friday's composite PMIs. Ifo dropped solely due to its expectations component which fell to 89.0 (consensus: 90.7, prior: 90.3), whereas the assessment of the current business situation stood unchanged at 88.3 (consensus: 90.7, prior: 90.3). The June decline in both the Ifo and PMI follows several months of strengthening. Although one should caution against overinterpreting a single month's data, the weak sentiment signals in June clearly questions the strength of the growth rebound seen in the first half of 2024.

In Sweden, finance minister Elisabeth Svantesson declared victory over inflation, and stated that fiscal policy would no longer try to beat inflation. The finance minister however reiterated that what matters going forward is not the amount spent, but rather the type of fiscal measures that are implemented, as long-term fiscal stability remains a core objective. As such, the finance minister warned that fiscal policy will not necessarily turn expansionary just because inflation has come under control.

In the US, President of the Chicago Fed, Austan Goolsbee, said policy makers were still looking for further cooling of inflation before considering initiating their first rate cut. Goolsbee described himself as a 'closet optimist' that improvements in terms of inflation would soon show themselves in data releases.