US researchers at the National Centres for Environmental Prediction have identified Monday as the hottest day on earth since records began at the end of the 1800s. With the global average temperature exceeding 17.1 degrees Celsius, scientists cited the impact of greenhouse gas emissions and El Niño. Monday’s record broke the previous record of 16.92 degrees Celsius which was reached in August 2016. Major heatwaves have been seen across Spain, China, and other countries across Asia with June already marking the hottest month since records began across the world. Monday also saw Antarctica – currently in winter – breach its hottest day in the month of July, pushing 8.7 degrees Celsius. Here, as the Guardian Notes “surface air temperatures worldwide exceeded the 1.5C Paris agreement threshold in June for the first time, and stayed there for several days, according to the EU’s Copernicus Climate Change.”
June was also the hottest month across the UK since records began with a mean temperature of 15.8 degrees Celsius, exceeding the previous record of 14.9, which was reached in 1940 and 1976. The mean temperature was also around 2.5 degrees Celsius above the usual June average. The Met Office stated that it marked the “fingerprint of climate change”.
Yesterday, the Greek PM Kyriakos Mitsotakis committed to repay some of the country’s bailout loans ahead of schedule. With Greece’s debt being 171.30 percent of the country’s Gross Domestic Product in 2022, it currently has the largest level of debt relative to output across the Eurozone, though is a significant fall from the 206.3% seen during 2020 as the country grappled with lockdowns. Citing Mitsotakis’ pledge, Bloomberg stated that “the early repayment of the so-called Greek Loan Facility will mark a symbolic step for Mitsotakis as he seeks to consign to the past the years of financial turmoil which saw his country come close to losing its place in the European currency union and left it as the only euro area member with a junk rating”.
Last quarter, S&P upwardly revised their outlook for Greece from stable to positive citing structural reforms, a rise in investment and an improving fiscal stance. While S&P improved their outlook in May, they kept the country’s credit rating below investment grade at “‘BB+/B”. In an interview with Bloomberg yesterday, Mitsotakis said that he will try to recover Greece’s investment-grade sovereign credit rating, some 13-years after it was removed. S&P’s next review for Greece is on 20 October.
Today in Focus
Today will see the release of Eurozone PMI data, where markets are expecting to see a print of 50.3 pts, in line with last month’s figure. This comes as the market is expecting to see Germany’s composite figure come in at 50.8pts, while they expect a softer figure of 47.3pts from France. In the UK, services PMI is expected to come in at 53pts with a composite figure of 52.8pts.
At 10:00, markets will be focusing on Eurozone producer price index where falling energy prices are expecting to feed into a negative print of -1.8% on an month-on-month basis.
Later today, markets will turn their attention to the publication of the FOMC’s minutes where they will be seeking some guidance of the Fed’s monetary policy course. At last week’s ECB symposium, Powell stated that “although policy is restrictive, it may not be restrictive enough and it has not been restrictive for long enough”. Given the release of the Fed’s dot plot shortly after their decision pause on 14 June (which left the fed funds target rate at 5%-5.25%), Powell reiterated that the “strong majority for two more rate hikes in dot plot”. As such, the Fed could be looking at a funds target rate of 5.5%-5.75%.
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