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CENTRAL AND EASTERN EUROPE: Despite stronger-than-expected growth in June, second-quarter retail sales growth was slower than in 1Q26, pointing to a moderation in private consumption growth. Nevertheless, robust fixed investment growth more than offset weaker consumption spending, lifting GDP growth to around 3.8 YoY in the second quarter from 3.5 YoY in the first
ASIA/PACIFIC: Bank Indonesia unexpectedly kept its policy rate unchanged, signalling a greater willingness to support growth. Rising oil prices mean BI's tightening cycle may not be over yet. While improving sentiment has eased immediate market concerns, sustained foreign inflows will depend on fiscal credibility and rupiah stability
EUROPE: Lower food and services inflation is welcome news for the Bank of England hawks, who worry the UK is at risk of another persistent bout of price pressure. Though inflation is set to rise towards 3.5 later this year, we expect the Bank to keep rates on hold throughout 2026
The defensive currencies – the Japanese yen and the Swiss franc – remain soft. That may be because equity markets remain reasonably bid despite the rise in energy prices. But a far more important factor appears to be low interest rates and central banks that will be slow to hike. Expect USD/JPY and USD/CHF to stay bid during this period of high energy prices
Oil prices pushed higher again yesterday amid mounting supply risks as hopes fade for a temporary ceasefire between the US and Iran
CENTRAL AND EASTERN EUROPE: In line with the telegraphed 'mini cycle', the National Bank of Hungary continued to cut rates in July. The Monetary Council will closely monitor developments in the risk premium, but we do not expect any further damage and anticipate more rate cuts
New investment incentives may support US aluminium smelting over time, but the market is likely to remain reliant on imports, keeping Midwest premiums elevated
EUROPE: The European Central Bank's latest bank lending survey indicates more business loan demand for investment plans, while uncertainty is having more of an impact on households and banks. The survey doesn’t indicate a clear change in financial conditions, though
EUROPE: We expect the ECB to hold rates steady on Thursday. But what was meant to be a quiet meeting may evolve into a hawk-dove tug-of-war. Against the backdrop of renewed escalation in Iran, we think the policy message should focus on preserving market pricing, with hints of a September hike. Still, rates and FX are likely to take their lead from the oil market
How bad could it get for energy markets? And what does the spike in oil and natural gas prices mean for Europe’s economy and the ECB? Join us on Thursday for the first episode of What if? – a new summer webinar series hosted by James Smith exploring what could turn today’s market consensus on its head. Sign up now
