US economic releases were light, yet positive. The June Leading Economic Index (LEI) grew 0.6% m/m and beat expectations—the biggest gain so far this year. June housing starts rose 8.3% m/m, ahead of forecasts. On the political front, Senate GOP leaders abandoned efforts to replace the Affordable Care Act after two draft bills failed to get enough party support.
In the UK, June core inflation dropped to a three-month low of 2.4% y/y. June retail sales rose 0.6% m/m (2.9% y/y), beating expectations. In the eurozone, June inflation remained stable at 1.1% y/y, in line with forecasts. The eurozone’s Q3 Senior Loan Officer Opinion Survey—a forward looking indicator of banks’ willingness to lend—suggests loan growth should rise. The European Central Bank announced plans to keep interest rates and its quantitative easing program unchanged.
In Asia, the Bank of Japan (BoJ) also left monetary policy unchanged, maintaining its short-term rates, asset purchase program and yield curve control policy. Despite the BoJ’s improved assessment of Japan’s economy, they pushed back the timeline for reaching their 2% inflation target from 2018 to 2019. In China, Q2 2017 GDP grew 6.9% y/y, ahead of the expected 6.8% rate. Exports and production were key growth drivers, and retail spending and factory output were overall bright spots. Likewise, other monthly economic data broadly exceeded expectations. In our view, Chinese “hard-landing” fears continue to look far off base.
On Wednesday, the Fed meets to determine monetary policy. The US and the UK report housing data and preliminary Q2 2017 GDP. Japan releases inflation, employment, manufacturing and trade data. p>
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