25 Jul 2018
Up this week
EU Leaders will meet for the much anticipated 28-29 June summit.
Several months ago this was billed as an important meeting for closing critical Brexit issues including on the shape of the UK’s future partnership with the EU. Talks however, have got tied up, not least because of disagreement over the required shape of the ‘backstop’ solution to avoid a hard border between Northern Ireland and the Republic. As such we expect little concrete news on Brexit from the Brussels gathering next week. ‘Flash’ CPI inflation figures for June are due, where the ECB and others will be waiting with baited breath to see if the 1.9% May inflation reading is repeated and if the ‘core’ measure manages to eke out a rise.
US this week
Stateside we will see the publication of the third Q1 GDP estimate, May’s PCE inflation figures, June’s Conference Board consumer confidence measure and preliminary durable goods figures for May too. All eyes will still be firmly fixed to the ongoing global trade spat, particularly following Friday’s announcement that President Trump is ready to raise import tariffs on European made cars.
UK this week:
The Bank of England’s Financial Stability Report due on Wednesday and with Governor Carney’s related press conference shortly thereafter. We can also expect the third estimate of UK Q1 GDP. With these national accounts figures produced on next month’s ‘Blue Book’ consistent basis, sizeable revisions to past GDP releases look likely. We suspect we may see an upward revision to the current Q1 estimate of +0.1% (see indicator section, below, for details). Alongside we will get Q1 UK current account figures. Bank of England mortgage approval numbers, net mortgage lending data and consumer credit figures are also due on what looks to be a ‘Super Friday’ for indicators.
PBoC reserve requirement cut
The People’s Bank of China announced a 50bp reduction in bank reserve requirement ratios (RRR) for ‘some banks’, but including the big state lenders, effective 5 July. At present RRR stands at 16% for large banks and 14% for smaller institutions. There has been talk in Beijing for a while about lowering RRR, but the specific timing of this move will coincide with the start of imposition of US tariffs on Chinese imports (and China’s retaliatory action) on 6 July. Chinese stocks failed to rally on the news – the Shanghai index is currently down 0.5%.
Weekend Press Review: DHG, FBD, PropertyDHG
UK hospitality group Queensway intends to develop a 141 bedroom hotel at Moore Lane in Dublin’s north inner city. The site has existing planning permission for a hotel scheme. Queensway intends to develop the property under its Point A hotel brand. (The Sunday Times)
FBD: Arachas Corporate Brokers, the PE-backed insurance provider, is to acquire Dublin-based Cover Centre Insurance in a deal estimated at €5-7m. The target is a specialist underwriting agency selling home and van cover which had GWP and net income of €11m and €358k respectively in the year to end-March 2017. (The Sunday Times)
Irish homebuilders: Property group Oakmount has purchased the prominent Flanagan’s of Mount Merrion site in south county Dublin. It also owns the adjacent Union Cafe site and the combined land has planning permission for almost 100 apartments. (Irish Times)
15.00 US New Home Sales