Events to Look Out for Next Week

Andria Pichidi

July 21, 2023

Welcome to our weekly agenda, our briefing of all the key financial events globally.

The focus is now turning to next week’s round of central bank announcements. Expectations for a one-and-done stance from the FOMC were bucked by better-than-expected claims data. The market repriced for about a 44% risk of a second hike after the all-but-done 25 bp tightening on Wednesday. Chances for that outcome were knocked down to about 25% following the surprisingly cool CPI and PPI reports. The ECB is expected to deliver another 25-basis point hike next week, while keeping all options open for September.

Monday – 24 July 2023

Markit PMIs (EUR, GMT 07:30-08:00) – The Germany’s HCOB manufacturing PMI dropped to 40.6 in June from 43.2 in the previous month. The June reading was the weakest in over three years, driven by a “sustained deterioration in new orders across the sector”. HCOB Services PMI remains a bright spot — at least compared to the Manufacturing PMI.
Markit PMIs (GBP, GMT 08:30) –UK Preliminary PMI readings for June are expected to show slight declines in both the Services and Manufacturing sectors with the former falling to 53 from 53.7 and the latter falling to 45.9 from 46.5.
Markit PMIs (USD, GMT 13:45) – June’s Services PMI came out at 54.4, while Manufacturing PMI at 46.3.

Tuesday – 25 July 2023

German IFO Business Climate (EUR, GMT 08:00) – German IFO business climate plunged to 88.5 in June, from 9.15 (was 91.7) in the previous month. That was the lowest reading since November last year.
Consumer Confidence (USD, GMT 14:00) – US consumer confidence is expected to fall to a 10-month low of 99.0 in May from 101.3, versus a 1-year high of 109.0 last December and a 17-month low of 95.7 last July. The expectations index is expected to rise to 69.4 from 68.1, versus a 9-year low of 65.3 in July of 2022. We’ve seen a modest confidence updraft since mid-2022, though all of the measures have deteriorated sharply from the mid-2021 peak.

Wednesday – 26 July 2023

Consumer Price Index (AUD, GMT 01:30) – The annual inflation rate in Australia dropped to 7.0% in Q1 of 2023 from an over-30-year high of 7.8% in the previous period, compared with market forecasts of 6.9%. It was the lowest print since Q2 of 2022. The CPI for Q2 is expected to have declined to 6.2%.
Interest Rate Decision, Monetary Policy Statement and Press Conference (USD, GMT 18:00) – The FOMC meeting is fast approaching. The July 25-26 FOMC is a fait accompli. The big question mark is the path forward and we expect Chair Powell and Company to leave the door wide open for either another hike down the road, or a pause. The markets are repricing for about a 44% risk for a subsequent quarter point tightening before the year is out. We do look for Powell to indicate the 2% goal has yet to be achieved, but progress is being made and policymakers remain resolute in bringing prices down to that level. There will be plenty more data before the next rate decision on September 20. We’ll also hear from Powell at the August Jackson Hole central banker meeting.

Thursday – 27 July 2023

Interest Rate Decision, Monetary Policy Statement and Press Conference (EUR, GMT 12:15 & 12:45) – The ECB is expected to deliver another 25-basis point hike, while keeping all options open for September. This will mean the presser should be a tad more dovish than in June, when Lagarde signaled more tightening is underway. However, while a September hike is far from certain, it remains a strong possibility, as inflation is still running at more than twice the target. Hence, all options on the table for September. This is also the prediction of the latest interest rate surveys from both Reuters and Bloomberg. The noise from base effects in German service price inflation aside, the most difficult part for the ECB to predict will be wage costs. There are signs that the labour market isn’t quite as tight as it was and that overall growth this year will be weaker than hoped at one point. This is partly a reflection of the sluggish recovery in China, but also the sharp rise in interest rates not just in the Eurozone. Demand is slowing, but with structural unemployment high across the Eurozone and wages still reacting to the erosion of real disposable income last year, the risks are tilted to the upside.
Advance GDP (USD, GMT 12:30) – Expectations are for Q2 GDP to grow by 1.6%, after the 2.0% Q1 clip. Growth should receive a healthy boost from a $68 bln Q2 inventory addition that reverses about half of the big -$133.0 bln Q1 subtraction that took the accumulation rate down to a lean $3.5 bln. Final sales are pegged at a near-flat 0.4% pace in Q2 after the 4.2% Q1 surge. Consumption growth slowed to the 0.9% area in Q2 after the 4.2% growth pace in Q1, while growth in business fixed investment has climbed to the 2.2% area from -0.4% in Q1.
Durable Goods Orders (USD, GMT 12:30) – Durable goods orders are expected to fall -1.0% in June with a -3.8% transportation orders decline after a 3.9% headline rise in May that included a 3.9% transportation orders increase.

Friday – 28 July 2023

Interest Rate Decision, Monetary Policy Statement and Press Conference (JPY, GMT 03:00) – This week, BoJ’s Ueda stated that accommodative policy will remain in place, until there is a fundamental shift in the central bank’s assessment of the inflation outlook. Ueda said the BoJ continued with monetary easing under yield-curve control under the “premise” that there is still some distance before the inflation target is hit lastingly. He added that “we check the premise at every policy meeting and I would like to say that, unless the premise is shifted the whole story will remain unchanged”.
Core PCE Price Index (USD, GMT 12:30) – US personal income expected at 0.5% for June after a 0.4% May gain. We expect a 0.8% rise in compensation after a 0.2% gain, given a 0.4% June rise for hours-worked and a 0.4% rise for hourly earnings. The savings rate will likely tick up to a 1-year high of 4.8% from a prior high of 4.6% in May, leaving a steep climb from a 17-year low of 2.7% in June of last year. Consumers are no longer spending more than they earn, as “stimulus funds” apparently ran dry around mid-2022.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.