The third estimate of US GDP saw a marginal upward revision to the Q1 print, increasing to 1.4% q/q annualized growth from 1.3% previously. In contrast, personal consumption estimates were revised lower once again, declining to 1.5% q/q annualized from 2% in the second estimate.
US initial jobless claims saw a 6k fall in the week ending 22 June, to reach 233k, only slightly lower than the 235k consensus expectation. Part of the decline may be explained by seasonal factors attributable to the Juneteenth holiday. Despite the decline the trend in the four-week moving average remains on an upward trajectory. Continuing claims in the week ending 15 June rose to their highest level since end-2021, reaching 1839k from 1821k the week prior.
US durable goods orders saw a fractional rise in May, increasing 0.1% m/m. While the outturn was better than consensus expectations of 0.5% m/m decline, the headline number arguably flattered the actual picture, with the increase largely driven by orders for military aircraft. In contrast orders for business equipment fell, pointing to hesitancy amongst firms to invest amidst still-high interest rates. Durable order growth for April was revised down to 0.2% m/m from an initial estimate of 0.6%.
The Turkish central bank kept its one-week repo rate on hold at 50.0% at its meeting yesterday, marking the third meeting in a row where the benchmark rate was held steady. The decision was widely expected, as while real rates remain sharply negative, inflation is now expected to have peaked having hit 75.5% y/y last month, and the TCMB forecasts it will slow to 38.0% by year-end. Nevertheless, the bank’s communiqué acknowledged that ‘services inflation, inflation expectations, geopolitical risks, and food prices keep inflationary pressures alive’ and stated that the MPC ‘remains highly attentive to inflation risks.’
Today’s Economic Data and Events
- 10:00 UK GDP (Q1 final estimate). Forecast: 0.6% q/q
- 12:00 ECB 1YR inflation expectations (May). Forecast: 2.8% y/y
- 16:30 US personal income (May). Forecast: 0.4% m/m
- 16:30 US personal spending (May). Forecast: 0.3% m/m
- 16:30 US PCE deflator (May). Forecast: 2.6% y/y
Fixed Income
- US treasury yields fell back during Thursday, with several US data points – including a downward revision to personal consumption – pointing to lackluster activity. Both the 2yr and 10yr yields declined by 4bps to reach 4.712% and 4.2864%, respectively.
- Moves in European bond yields were mixed yesterday. There were gains in French bond yields, ahead of Sunday’s first round of elections, while yields on both the 10yr Bund and Gilt fell by less than 1bps to 2.447% and 4.1293%, respectively.
- Fitch affirmed their 'AA-' rating on the UAE and kept the outlook for the rating at stable. The rating is based on low consolidated public debt and high levels for foreign assets.
FX
- The US dollar reversed some of the strength seen earlier in the week, dropping 0.14% against a basket of major peer currencies on Thursday. EURUSD gained 0.2% to reach 1.0704 and GBPUSD rose 0.13% to 1.2639. USDJPY was broadly unchanged, declining just 0.03% to 160.76.
- Moves in commodity currencies were muted on Thursday. Both AUDUSD and NZDUSD fell just 0.02% to 0.6647 and 0.6082, respectively.
Equities
- US equity markets gained only marginally on Thursday, amidst some signs of weaker economic activity. The Dow Jones and the S&P 500 gained 0.09%, while the NASDAQ rose 0.3%.
- There were widespread declines on European equity indices on Thursday. The Eurostoxx 50 fell 0.27%, the CAC 40 dropped 1.03%, and the FTSE fell 0.56%. The DAX was the exception to the downward trend, gaining 0.3%.
- Regionally, the DFMGI gained 0.07% and ADXGI rose 0.49%.
Commodities
- Oil futures rose on Thursday, with Brent gaining 1.34% to USD 86.39/b, while WTI rose 1% to USD 81.74/b. Both contracts have continued to edge higher in early morning trade.