LONDON, July 29 (Reuters) - Following are five big themes likely to dominate the thinking of investors and traders in the coming week, and the Reuters stories related to them.
After all the talk of helicopters dropping money from the skies -- routinely ruled out by the Bank of Japan -- the BOJ’s monetary easing steps disappointed markets. The blockbuster still might come: the BOJ is assessing the impact of negative interest rates and of its asset-buying programme. BOJ Governor Haruhiko Kuroda said the limits of both had not been reached. This could have implications for other central banks around the world contemplating further easing, notably the European Central Bank and the Bank of England. The latter meets in the coming week and is widely expected to take steps to ease the economic pain of Britain’s vote to leave the European Union.
* BOJ eases policy by doubling ETF buying, underwhelms expectations
* “Helicopter money” might weaken currencies more than QE as sky’s the limit
* Global QE running at record $180 bln per month, and rising
* BoE policy decision Aug. 4, Australia Aug. 1, BOJ minutes Aug. 3
It seems unlikely that all the to and fro in other major economies in the past week has been of much comfort to a Bank of England intent on doing something to ease negative effects of last month’s Brexit vote. The only data so far on the economy have been often-flaky sentiment numbers, but they were enough to flip even the Bank’s main hawk, Martin Weale, towards a preventative relaxation of the monetary purse strings. Two questions now: will that include more quantitative easing as soon as this week? And are negative interest rates on the cards? For the moment, markets judge not. But a couple of clear signals in that direction from Governor Mark Carney on Thursday and gilt yields and the pound could sink.
* Brexit shockwaves hit British jobs, banks, automobiles
* Bank of England to cut key rate Aug. 4. Hold off on QE for now
* Pound calms before first UK/US rate flip in 10 years
Oil is a bear market once again, with Brent and U.S. crude futures down 20 percent from their highs and sliding towards $40 a barrel. The peaks above $50 were struck as recently as June, signalling just how rapid the decline has been. Worries over global oversupply that drove oil below $30 earlier this year have never really gone away, and a survey on Friday showed OPEC supply rose in July to 33.41 million barrels per day, the highest ever. Worries about weak demand are resurfacing too. U.S. growth this year has been sluggish and global growth will be on the soft side. Brexit won’t help either. Oil’s renewed slide will cool inflationary pressures, heaping further pressure on developed world central banks as they struggle to lift inflation back to target.
* OPEC oil output set to reach record high in July - survey
* Inventory liquidation weighs on U.S. second-quarter GDP growth
* Oil down 2 pct; July to be worst month in a year for U.S. crude
U.S. economic data has, on the whole, been pretty strong of late so the dollar took a hammering when second-quarter economic growth came in at 1.2 percent, less than half as much as forecast. Investors pared back their expectations of a near-term interest rate rise by the Federal Reserve. The growth data came just two days after the latest Fed meeting at which policymakers said near-term risks to the economic outlook had diminished. They said the labour market had strengthened and markets will keep the customary close eye on monthly jobs data on Aug. 5 for confirmation.
* Fed leaves rates unchanged, says risks to outlook reduced
* Consumers seen powering U.S. growth in second quarter
* U.S. economy grows 1.2 percent in Q2 as inventories fall
Skies may be brightening over Spain. The (acting) government raised its forecast for 2016 economic growth after a resilient start to the year, despite seven months of political paralysis after two inconclusive elections. It forecast growth of 2.9 percent this year, up from 2.7 percent previously. Second-quarter growth came in at 0.7 percent, as forecast, extending its recovery from recession. On the political front, acting premier Mariano Rajoy has accepted a mandate to form a government. With Italy struggling with debt-laden banks and a referendum on constitutional reform due later in the year, the extra yield investors demand to hold Italian rather than Spanish 10-year bonds has ballooned to its widest since January 2015.
* Spain raises 2016 growth forecast in spite of political limbo
* Spain’s Rajoy to start government talks with other parties
* EU states back cancellation of Spanish, Portuguese budget fines - sources (Compiled by Nigel Stephenson; Editing by Catherine Evans)