UPCOMING EVENTS:
- Monday: PBoC MLF, German IFO, US Durable Goods Orders.
- Tuesday: US Consumer Confidence.
- Wednesday: Australia Monthly CPI, Nvidia Earnings.
- Thursday: US Q2 GDP 2nd Estimate, US Jobless Claims.
- Friday: Tokyo CPI, Japan Retail Sales, Eurozone Flash CPI and Unemployment Rate, Canada GDP, US PCE.
Tuesday
The US Consumer Confidence is expected at 100.1 vs. 100.3 prior. The last report saw the present situation index, which is generally a leading indicator for the unemployment rate, falling to a three-year low.
Dana M. Peterson, Chief Economist at The Conference Board said: “Confidence increased in July, but not enough to break free of the narrow range that has prevailed over the past two years. Compared to last month, consumers were somewhat less pessimistic about the future.”
“Expectations for future income improved slightly, but consumers remained generally negative about business and employment conditions ahead. Meanwhile, consumers were a bit less positive about current labour and business conditions.”
“Potentially, smaller monthly job additions are weighing on consumers’ assessment of current job availability: while still quite strong, consumers’ assessment of the current labour market situation declined to its lowest level since March 2021”.
Wednesday
The Australian Monthly CPI Y/Y is expected at 3.4% vs. 3.8% prior. The RBA continues to maintain a hawkish stance, while the market keeps on expecting at least one rate cut by the end of the year.
Thursday
The US Jobless Claims continues to be one of the most important releases to follow every week as it’s a timelier indicator on the state of the labour market.
Initial Claims remain inside the 200K-260K range created since 2022, while Continuing Claims have been on a sustained rise showing that layoffs are not accelerating and remain at low levels while hiring is more subdued.
This week Initial Claims are expected at 234K vs. 232K prior, while Continuing Claims are seen at 1870K vs. 1863K prior.
Friday
The Tokyo Core CPI Y/Y is expected at 2.2% vs. 2.2% prior. As a reminder, the economic indicators the BoJ is focused on include wages, inflation, services prices and GDP gap. The Tokyo CPI is seen as a leading indicator for National CPI, so it’s generally more important for the market than the National figure.
Moreover, Governor Ueda kept the door open for rate hikes as he said that the recent market moves wouldn’t change their stance if the price outlook was to be achieved and added that Japan’s short-term interest rate was still very low, so if the economy were to be in good shape, BoJ would move rates up to levels deemed neutral to the economy.
The Eurozone CPI Y/Y is expected at 2.2% vs. 2.6% prior, while the Core CPI Y/Y is seen at 2.8% vs. 2.9% prior. This report won’t change anything for the ECB as the central bank is going to cut rates by 25 bps in September.
The US PCE Y/Y is expected at 2.5% vs. 2.5% prior, while the M/M figure is seen at 0.2% vs. 0.1% prior. The Core PCE Y/Y is expected at 2.7% vs. 2.6% prior, while the M/M reading is seen at 0.2% vs. 0.2% prior. Forecasters can reliably estimate the PCE once the CPI and PPI are out, so the market already knows what to expect.
This report won’t change anything for the Fed as they will cut rates in September no matter what. The Fed is now focused on the labour market and the next NFP report is going to decide whether the FOMC will cut by 25 or 50 bps at the upcoming decision on the 18th of September.
