- China's official GDP data showed a stronger increase in second quarter growth than had been expected. June industrial production was stronger, but retail sales remained weaker. While US and European consumers generally built up savings in lockdowns, enabling them to spend subsequently, this was not generally the case in China.
- US June retail sales data should continue to grow (the consensus is for growth between 1.5% and 11.5% m/m). Savings acquired in lockdown are treated like a windfall gain. Past evidence suggests that this will be spent within six months or so, on consumer durable goods. There is little evidence that consumers hold onto the money as a precaution.
- The European Central Bank meets. Investors will feign polite interest, but really everyone wants to know what happens at the end of the week with the heads of government meeting on fiscal policy. Fiscal policy is where the real action is.
- UK May labor market data showed a stable unemployment rate and falling jobless claims. The furlough scheme is keeping people in employment. As the terms of that scheme change, sectors that are facing accelerated structural upheaval (retail, airlines) are likely to reduce employment. The strength of the data contrasts with the weakness in May GDP.