Busy day in the market with the focus on both Greece and the US. The discussion surrounding Greece was whether they would pass the new austerity measures. Meanwhile FOMC Chair Yellen took the stand on Capitol Hill in Washington to deliver her semi-annual speech before the House Financial Services Committee.
Closer to home, there was mixed employment numbers out of the UK as the unemployment rate nudged higher for the first time in two years, according to the Office for National Statistics. This is an increase of 15,000 from the previous quarter, with the jobless rate at 5.6%. Sterling weakened slightly on this news. However, average weekly earnings including bonuses rose at an annual pace of 3.2% in the latest three-month period, the fastest rate in five years.
The Greek parliament has voted through the first tranche of measures needed to progress an ESM funding deal, as had been widely expected. Worth noting that 32 Syriza members voted against the enabling bill, 229 of 300 members of parliament voted in favour.
FOMC Chair Yellen gave the market very little to go on in her House testimony, simply noting “If the economy evolves as we expect, economic conditions would make it appropriate at some point this year to raise the federal funds rate target”. This gives the FOMC room to be dynamic, whilst continuing to examine economic data which has been mixed of late. Meanwhile, the Beige Book was released last night and continued to paint the economy in a solid light with all twelve Districts indicating that economic activity expanded from mid-May through to June. In addition, we saw firmer manufacturing in New York whilst factory gate inflation nudged higher.
Looking to the day ahead, the market is likely to procrastinate about the long-term impact from the Greek decision. Meanwhile, the tone of the ECB press conference this afternoon will take centre stage. It is expected that the ECB will keep rates on hold but the tone of ECB Draghi will be key after the intense situation with Greece. Meanwhile, FOMC Chair Yellen continues her testimony in Washington. On the economic docket, the focus will be on the US with the release of the weekly jobless claims and Philly Fed manufacturing.