FOMC minutes tonight: Looking for YCC discussions

Market movers today

Today's key event is the release of the FOMC minutes from the June meeting. Of particular interest are the Fed members' discussions on yield curve control, as mentioned by Fed Chair Powell in his prepared remarks at the press conference after the policy announcement. For more see Fed Monitor: A primer on Fed's discussions on changing its forward guidance, 17 June.

June unemployment data out of Germany are due at 09:55 CEST.

In the US, the ADP jobs report for June is due for release at 14:15 CEST. This may provide some insight in the official jobs report on Thursday (although it is not usually considered a reliable indicator). Also the ISM manufacturing index for June due out at 16:00 CEST is interesting, although we have already got the similar PMI index.

In Norway and Sweden, PMI manufacturing indices for June are due at 08:30 CEST and 10:00 CEST, respectively.

Riksbank rate announcement at 09:30 CEST. No policy change expected but this time around it seems likely that the Riksbank will present actual forecasts for growth inflation and the policy rate rather than just different scenarios as was the case in the previous policy report. We do not foresee any particular market movements on today's announcement.

Today, Germany takes over the EU presidency, in what can shape the EU permanently as the Next Generation EU and the recovery fund is expected to be finalised.

Selected market news

Risk sentiment was choppy yesterday, with global equities ending mixed, mainly split between positive performance in the US and negative performance in Europe. US equities ended their best quarter in more than 20 years. The congressional hearing of Powell and Mnuchin did not contain new elements and we look forward to the minutes tonight (see above). The positive sentiment has spilled over to the Asian session.

Euro area inflation ticked up to 0.26% in June from 0.09% in May, with the main driver being energy prices (-9.35% from -11.95%), which are starting to recover as the trough in the oil price is behind us. Core inflation dipped back to 0.82% from 0.90% in May, driven by lower service price inflation and NEIG inflation. From next month onwards, core inflation is set to take a marked dive though, with the effects of the temporary German VAT cut, see Euro Area Research, 11 June.

Yesterday, ECB board member Isabel Schnabel joined her colleagues at the Governing council in repeating that the ECB may not need to use the full EUR1350bn PEPP envelope and that it seems unlikely that PEPP needs expanding. Looking beyond ECB, this stance of central banks not adding additional stimuli now mirrors comments in Fed and BoE.

Similar to the official PMI numbers yesterday, the private Caixin index rose and beat expectations at 51.2 versus 50.7 in May.