2 Overnight Headlines and 9 Items for the Day Ahead

Market strategists at Nomura, including Muhammad Kirdar, highlighted the following headlines overnight and said investors should keep an eye on the following nine items for the day ahead:

Headlines:

• Germany: The IFO business climate index fell 0.7 points to 109.7 and the expectations index dropped 0.4 points to 104.8 in June (Consensus: 110.3 and 106.0), while the current assessment index was unchanged at 114.8 (Consensus: 115.0).
• Japan: Prime Minister Abe‟s cabinet has approved the updated growth strategies.
• Indonesia: With the presidential election just three weeks away (9 July), Nomura is taking a survey of expectations to gauge the potential market reaction to the outcome.

The Day Ahead:

• Prime Minister Abe will hold a press conference marking the end of the Diet session and discussing the second round of growth strategies announced last week (5:30 EDT).
• Chancellor Merkel hosts Jordan‟s King Abdullah to discuss Syria and Iraq (8:30 EDT) before meeting with NATO Secretary General-designate Jens Stoltenberg (10:00 EDT)
• FOMC: Philadelphia Fed President Plosser will discuss the economic outlook and monetary policy at the Economic Club of New York (8:05 EDT) and San Francisco Fed President Williams will be speaking at Stanford Law School (18:30 EDT)
• ECB: Governing Council members Mr Noyer and Mr Nowotny will speak before the French association of financial societies (6:00 EDT) and the Austrian parliament (8:00), respectively, while Executive Board Member Coeuré will participate on a panel discussion on “rethinking economics after the crisis (9:50 EDT).
• US Treasury Secretary Lew will testify on the FSOC annual report before the House Financial Services Committee (10:00 EDT).
• Weekly chain store sales: Father‟s Day boosted sales of men‟s items last week. Given that June is a five-week retail month ending on 5 July, many retailers are looking for strong numbers before transitioning into fall and back-to-school shopping.
• New home sales: Mortgage applications for home purchases and single-family building permits increased in May, supporting our expectation that new home sales increased by 2.8% to an annualized rate of 445k (Consensus: +1.6% to an annualized rate of 440k) (10:00 EDT)
• Case-Shiller home price index: The Case-Shiller 20-city composite home price index increased by 12.0% in 2013, far exceeding the meagre 0.9% gain in 2012. However, the pace of price appreciation began to slow late last year and should continue to slow
• throughout 2014, as the number of homes available for sale rises and the share of distressed sales continues to decline. Consensus expects an 11.5% y-o-y increase in the index in April (9:00 EDT).
• Consumer Confidence: The Conference Board‟s measure of consumer confidence has been relatively elevated this year. The expectations index in particular has been robust and should be supportive for medium-term consumer activity. The preliminary reading of the University of Michigan consumer sentiment survey fell in early June. However, higher equity prices and low initial jobless claims this month suggest that consumers should continue to be optimistic. We expect consumer confidence to improve and forecast an increase in the index to 84.0 from 83.0 in May (Consensus: 83.5) (10:00 EDT).

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