UPCOMING EVENTS:
Tuesday:
UK Jobs Report.
Wednesday:
RBNZ Rate Decision, US CPI, BoC Rate Decision.
Thursday:
UK GDP, US PPI, US Jobless Claims.
Friday:
University of Michigan Consumer Sentiment.
Tuesday:
The UK unemployment rate is expected to remain unchanged at 3.8%, but unless we
see a big beat/miss, the market will be more focused on the wages data. The
Average Earnings ex Bonus is expected to tick lower to 7.1% vs. 7.2% prior,
while the Average Earnings Index + Bonus is seen higher at 6.8% vs. 6.5% prior.
This report will shape markets’ expectations around the next BoE rate decision
and whether the central bank is likely to go with another 50 bps hike or step
down to 25 bps. The ultimate decision maker will be the CPI report due on July
19th.
UK Average Earnings ex Bonus
Wednesday:
The RBNZ is expected to keep the official cash rate unchanged at 5.50%. This
decision is expected due to the New Zealand slipping into a technical recession
recently and the RBNZ maintaining its terminal rate forecast unchanged at 5.50%
at the last meeting, while also removing the language of further rate increases
from the statement.
RBNZ
The US CPI Y/Y is expected to fall to 3.1%
vs. 4.0% prior, while the M/M reading is seen at 0.3% vs. 0.1% prior. The Fed
is more focused on the Core figures though, and those are still pretty high.
The Core CPI Y/Y is seen at 5.0% vs. 5.3% prior, while the M/M reading is
expected at 0.3% vs. 0.4% prior. It’s unlikely that the Fed will skip the July
hike unless we see some good misses on the Core Inflation side. A
higher-than-expected core print is likely to send the markets into risk off
across the board and it’s going to be hard to envision a weak US Dollar at that
point.
US Core Inflation MoM
The BoC is expected to hike by 25 bps again
after the surprising hike at the last meeting and take the rate to 5.00%. I’d
say there’s some chance that the BoC decides to skip at this meeting given the
miss in the recent inflation data and the decline in average hourly earnings to
4.2% vs. 5.1% prior.
BoC
Thursday:
The US Jobless Claims have been moving the markets quite notably lately as the
market is particularly focused on the labour market. Initial Claims are
expected at 249K vs. 248K prior, while Continuing Claims are seen at 1731K vs.
1720K prior. Despite some upward spike in the Initial Claims, the Continuing
Claims keep on trending downwards showing that people are able to secure jobs
pretty fast after getting unemployed.
US Continuing Claims
Friday:
The University of Michigan Consumer Sentiment is expected at 64.8 vs. 64.4
prior. The market is more focused on the inflation expectations readings and
especially the long-term ones. There are no forecasts at the moment, but the
prior readings showed 3.3% for the 1-year inflation expectations and 3.0% for
the 5-year expectations.
Consumer Inflation Expectations 5-year
This article was written by Giuseppe
Dellamotta.