US economy contracts in Q2

The euro and sterling are both firmer against the dollar this morning trading at around $1.0250 and north of $1.22 respectively, which leaves the single currency-pound exchange rate hovering just below 84p

It was another positive day for equity markets with US and European stocks both chalking up gains of more than 1%, while government bond yields fell with German and US 10-year yields more than 10bps lower at just over 0.80% and just under 2.70% respectively

The US economy contracted again in the second quarter according to a preliminary estimate of GDP, while fell by 0.2% over the three months to June (following a decline of 0.4% in the first quarter of the year) partly due to weak investment and a drop in government spending

The annual rate of CPI inflation in Germany picked up to 8.5% in July according to the ‘flash’ reading published yesterday, though this was still below the May reading of 8.7%

It’s a busy day for economic data today with Euro area GDP (Q2) and CPI inflation as well as US consumer spending, consumer confidence, Employment Cost Index (ECI) and PCE inflation all scheduled for release