Daily Economic Outlook Thursday, 29th July 2010

Economic Research
• Wednesday's testimony by the Bank of England MPC members to the
Treasury Select Committee highlighted the wide range of views about Markets
the risks surrounding the UK economic outlook. One of the risks is the Currencies % change (on day)
renewed weakness in the housing market as one of the reasons why €/$ 1.299 0.05
any discussion of policy tightening is far too premature and further £/$ 1.560 0.22
easing may yet be required to assure that growth momentum is €/£ 0.833 -0.18
sustained. House price indices have began to roll over in the past few £/€ 1.201 0.18
months and leading indicators, such as mortgage approvals and £/CHF 1.651 -0.08
net mortgage lending, suggest no immediate respite on the horizon. £/¥ 136.69 -0.03
$/¥ 87.61 -0.27
In June, we expect both series to have remained subdued, with
Equities % change (on day)
approvals slipping to 47k and net mortgage lending declining to
Dow Jones 10515.2 -0.21
£1.1bn. S&P 500 1108.8 -0.45
FTSE 100 5319.7 -0.86
• In the eurozone, the focus will be on the publication of the European
Nikkei 225 9753.3 2.70
Commission economic confidence readings which we expect to show DJ Eurostoxx 2765.8 -0.13
very little change in the overall regional sentiment in the month of Commodities (US$) % change (on day)
June. While in Germany, the latest labour market data are expected Oil WTI, near-term future 77.07 -0.55
to indicate that unemployment was fairly static in July as companies Gold spot 1161.0 -0.05
remain reluctant to take on labour given the uncertain global economic
outlook.
Interest rates (%) bp change (on day)
UK Official Bank Rate 0.50 0.0
3-mth interbank 0.74 -0.1
Key data and events today 2-yr swap 1.49 -5.5
Country Time Events Consensus Forecast Previous 5-yr swap 2.56 -4.5
UK 07:00 Nationwide house prices (Jul) -0.5% (7.0%) -0.6% (7.1%) 0.1% (8.7%)
10-yr swap 3.52 -2.5
FR 07:45 Producer prices (Jun) 0.3% (3.9%) -0.2% 0.0% (4.3%)
UK 10-yr benchmark 3.49 -3.0
US Fed Funds rate 0.25 0.0
GE 08:55 Unemployment change (000's) (Jul) -15K 10K -21K
GE 08:55 Unemployment rate (Jul) 7.6% 7.7% 7.7% 3-mth Libor 0.48 -0.6
UK 09:30 Net consumer credit (Jun) 0.2B 0.2B 0.3B 2-yr swap 0.81 -3.9
UK 09:30 Net lending sec. on dwellings (Jun) 1.0B 1.1B 1.2B 5-yr swap 1.95 -3.3
UK 09:30 Mortgage approvals (Jun) 48.0K 47.0K 49.8K 10-yr swap 3.03 -1.7
UK 09:30 M4 money supply (Jun) F n/a n/a 0.0% (3.0%) US 10-yr benchmark 3.04 -0.7
EC 10:00 Business climate indicator (Jul) 0.39 n/a 0.37
EUR ECB policy rate 1.00 0.0
EC 10:00 Industrial confidence (Jul) -5 -5 -6 3-mth Euribor 0.83 0.3
EC 10:00 Consumer confidence (Jul) F -14 -14 -14 2-yr swap 1.47 -2.7
EC 10:00 Economic confidence (Jul) 99.2 99.0 98.7 5-yr swap 2.19 -4.3
EC 10:00 Services confidence (Jul) 4 4 4 10-yr swap 2.99 -1.4
CA 13:30 Industrial product price (Jun) 0.5% 0.4% 0.3% Euro 10-yr benchmark 2.75 -2.5
CA 13:30 Raw materials price index (Jun) 1.0% 0.9% -7.2% Japan Call rate 0.10 0.0
US 13:30 Initial jobless claims (w/e Jul 24) 460K 455K 464K 3-mth interbank 0.24 -0.1
5-yr swap 0.60 1.0
10-yr JGB benchmark 1.10 3.5

Key data and events over the week ahead Prices taken at London close; Swap rate quote conventions:UK - Semi, Actual/365 vs. 6M
Libor; US - Annually, Actual/360 vs. 3M Libor; Euro - Annually, 30/360 vs. 6M Euribor. Swap
Day Country Event rates are quoted as Ask prices
Fri 30 AU Private sector credit Chart: UK mortgage approvals expected to weaken in the months
CA GDP ahead
CH MNI business condition survey
EC Unemployment rate, CPI est.
GE IFO July business climate survey Change in balance over year, index points
JN PMI, CPI, Jobless rate, IP, Housing starts 120 % YoY 150
PO Base rate announcement 100 RICS new buyer
UK Nat'wide house prices, GfK consumer confidence survey 80 enquiries, 100
US GDP, Personal consumption, GDP, PCE, Employment cost rate, U. of 60 3mth lead
Michigan confidence 40 50
Mon 2 EC PMI surveys 20
UK PMI survey 0 0
US ISM Manufacturing, construction spending -20
-40 Mortgage -50
SK Consumer prices
approvals
-60
(RHS)
Tue 3 AU RBA cash target rate -80 -100
2004 2005 2006 2007 2008 2009 2010
EC Producer prices
US Core PCE deflator, personal income and spending, factory orders
UK DMO to auction £3.75bn of 2.75% gilts due 2015
Source: Thomson Datastream

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