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Lending and growth

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  • Revised second quarter GDP is due from both the US and the UK today. The US is seen revised somewhat higher, giving some additional momentum into the second half. The UK data has tended to surprise positively this year, so markets may not be surprised if there were a small positive revision.
  • The Euro area gives us M3 money supply data, of use as an indication of the broader health of the Euro area monetary transmission mechanism (aka "Are banks lending yet?"). The sub normal bank lending does not prevent positive GDP, but it does prevent normal economic growth.
  • Three Fed speakers hit the wires today, including governor Stein covering the racy topic of yield investors and the monetary transmission mechanism. With investors still looking for signposts after the recent policy error, the tone of all the speakers' remarks will be closely watched.
  • The US flow of funds showed that household net wealth rose, and is now 8% above the pre-crisis peak (the distribution of that wealth may be somewhat skewed of course). The report also showed that both households and corporates were borrowing again.

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