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  • Some investors were disappointed with the actions (or lack thereof) from the ECB at their recent meeting. However, at the subsequent press conference Mario Draghi highlighted the ECBs determination to achieve their inflation target. In all likelihood the ECB will cut the deposit rate at their next scheduled meeting in September which will also be accompanied with their updated economic forecasts. There may be some dissenters to the ECBs proposed necessary dovish actions – notably Knot and Weidman.
  • US Q2 GDP came in at 2.1% y/y (better than the expected 1.8% y/y). The first estimate of the GDP figure typically has only circa 50% of the required inputs for calculation at its release date. Therefore there can be considerable revisions to the initial estimate however, the Q2 GDP figure does highlight the reliance of US growth on the consumer and the importance of a material ceasefire (if not cessation) of the Trump administrations trade war.
  • The tenure of Boris Johnson as Prime Minister has begun with many, if not all, of the same problems associated with Brexit in situ. Jean-Claude Juncker has stated that the withdrawal agreement negotiated with his predecessor will not be amended. In addition, the parliamentary arithmetic in the House of Commons has not changed in that a majority are not in favour of a no deal exit. At this stage, a UK General Election in autumn seems a distinct possibility.
  • PMIs for the manufacturing sectors in the US and EZ (see chart) provided sufficient support for the dovish monetary positions taken by Fed and ECB governors. The Fed are likely to be first off the grid with an interest rate cut at their July 30/31 meeting