According to Richard Franulovich, Research Analyst at Westpac, a probable 4%+ advance Q2 US GDP later this week will spotlight the strong growth credentials of the US, even allowing for the fact it overstates the true underlying momentum of the economy.
Key Quotes
“Against that there are nagging concerns the H1 slowdown in the Eurozone might prove to be a more sustained downswing and Chinese growth is suddenly stuttering too.”
“Both hard data and soft surveys show US outperformance is returning back to the highs of early 2015.”
“Bond spreads will of course track the ebbs and flows in growth differentials and the +100bp widening in two year bond spreads in the USD’s favour over the last year seems entirely reasonable given US growth outperformance this year.”
“Last week’s regional July Philly and Empire PMIs came and went without much fuss. Both held firm and if anything provided yet another stark reminder of solid US conditions. But less well appreciated, the detail showed cooling CAPEX intentions.”
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