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From a macroeconomic perspective:
• The US: Acceleration in consumer spending and investment
The US economy rebounded strongly in Q2 with the second estimate of US real GDP growth showing a significant acceleration in consumer spending and investment. The economy remains on track with expanding industrial production and a service sector healthier than previously thought. Positive data aside, inflation continued to move away from the Federal Reserve’s target, casting further doubts on a third interest rate hike later this year.
• The UK: No imminent recession risk
The details of Q2 real GDP growth painted a bleak picture of the economy, although we view this weakness in the first half as transitory. A small rebound in growth from Q1 was driven by an upside surprise to government spending, while private consumption and investment data were flat. Forward looking signals point to a rebound in industrial production together with the long-awaited growth in exports. At the same time, inflation remains stable and was below market expectations in July, reducing the possibility that the Bank of England will hike interest rates anytime soon.
• The Eurozone: Strong growth in Q2
The Euro area experienced strong real GDP growth in Q2, which has broadened and deepened across countries. Meanwhile, inflation remained short of the ECB’s target, providing little support for substantial tightening in monetary policy. We expect the Governing Council to prolong the quantitative easing programme by another six months in the autumn while reducing the amount of purchases to €40bn.